Faced with a gloomy economic outlook, the Cabinet yesterday approved the fiscal budget for next year, with the largest year-on-year increase in expenditures earmarked for projects designed to boost economic growth.
The proposed budget allotment for economic development projects was set at NT$272.6 billion (US$9.1 billion), an increase of 1.6 percent, or NT$4.4 billion, compared with this year.
That would account for 14 percent of total government spending of NT$1.9446 trillion for next year. The additional NT$4.4 billion is to be used in the construction of railways, mass rapid transit systems, and agricultural and farm village development projects, the proposal showed.
“The problem of economic adversity was of most concern when we wrote the budget,” Directorate-General of Budget, Accounting and Statistics (DGBAS) Minister Shih Su-mei (石素梅) told a press conference after the meeting.
Compared with this year’s budget, the Cabinet proposed cuts in expenditures for defense; education, science and culture; community development and environmental protection programs; and debt repayment items, except for expenses in economy and statutory spending in social welfare programs, retirement pensions, and general fund subsidies for local governments.
Shih said the economic slump and uncertainty put the DGBAS “in a difficult situation” to meet all budget requests made by all government departments and agencies.
“What we focused on for next year was mainly to enlarge the budget for public construction projects to stimulate economic growth,” Shih said.
For economic development, the government has earmarked NT$191.2 billlion in public construction projects, an increase of NT$6.1 billion, or 3.3 percent, compared with this year, the proposal showed.
However, if expenditures from special budgets and state-owned enterprises’ budgets were included, the total budget for public construction projects next year would be NT$379.1 billion, a decrease of NT$19.4 billion compared with this year, mainly due to the completion of a project by state-owned oil refiner CPC Corp, Taiwan (CPC, 台灣中油) at the end of this year, Shih said.
Proposed expenditure on community development and environmental protection programs took up the largest share of cuts, with the budget for this category set at NT$17.2 billion next year, a decrease of 5.5 percent, or NT$1 billion.
This was followed by defense spending, which saw its budget cut by 0.7 percent, or NT$2.1 billion; education, science and culture, which decreased by 0.4 percent, or NT$1.6 billion; and debt repayment, which declined by 0.3 percent, or NT$400 million.
Shih said that the proposed defense spending of NT$307.3 billion next year, together with a fund of NT$83.3 billion operated by the Ministry of National Defense to be used in the reconstruction of military dormitories and military camps and arms production by the Bureau of Armaments and Acquisition, would account for 2.71 percent of the projected GDP of NT$14.43 trillion.
The figure would still be below a pledge President Ma Ying-jeou (馬英九) made when he was running for office in 2008 to increase defense spending to 3 percent of GDP.
The draft budget for next year projected revenues of NT$1.7302 trillion, an increase of 0.02 percent, or NT$400 million, compared with this year, and expenditures of NT$1.7298 trillion, an increase of 0.3 percent, or NT$5.8 billion.
The government’s estimated fiscal shortfall for next year was NT$214.4 billion.
Shih said the government would take out loans of NT$284.4 billion next year and use the NT$7 billion surplus of the previous fiscal year to meet the shortfall to repay debts of NT$77 billion.
The DGBAS said the government’s outstanding debts would rise to an all-time high of NT$5.269 trillion, or 37.1 percent of the average GNP of the past three years, though still lower than the 40 percent debt limit.