The Cabinet agreed yesterday to hike defense spending by nearly 15 percent in next year's budget proposal in a show of resolve in the face of China's military threats.
The draft budget -- which must be approved by the legislature -- would give the Ministry of National Defense NT$345.9 billion (US$10.5 billion), an increase of NT$44.6 billion over this year, the Cabinet said in a statement.
Almost NT$10 billion of that amount is earmarked for the purchase of F-16 C/D Fighting Falcon fighter aircraft.
The total budget expenditure comes in at NT$1.7 trillion, while the Cabinet estimates its income for fiscal 2008 will be NT$1.6 trillion, leaving a deficit of about NT$97.9 billion.
The Cabinet said it would be the first time in nine years the deficit would be below NT$100 billion.
"Our policy is to gradually reduce government debt. We have been following that policy and will continue to do so while carrying out major construction projects," Premier Chang Chun-hsiung (張俊雄) said during yesterday morning's Cabinet meeting.
Chang also said that he expected lawmakers to speed up their review of next year's budget.
"This year's budget took the legislature almost a year to approve and the delay seriously affected government functioning. I hope that the same scenario will not be repeated this year," he said.
He said the government plans to spend NT$15 billion to support universities and academic research centers, NT$7.4 billion for cultural centers and museums, NT$9.3 billion on highway construction, NT$22.7 billion to expand mass rapid transit systems in Taipei, Taichung and Kaohsiung and NT$8.1 to construct of sewage systems nationwide.
"It is quite an effort to reduce the deficit while continuing with construction. But we will manage," Chang said.
Education spending (NT$318.3 billion) accounts for 18.7 percent of the total budget, social security makes up 17.5 percent (NT$297.5 billion), while economic development accounts for 11.9 percent, or NT$20.1 billion.
Taipei County's elevation to a special municipality means it will share central government funding with Taipei and Kaohsiung. The Cabinet earmarked NT$5.3 billion for the three to share.