Premier Sean Chen (陳冲) yesterday dismissed concerns over Taiwan’s increasing national debt in response to lawmakers’ worries the country could end up engulfed by a sovereign debt crisis similar to Greece.
Outstanding debts are expected to reach an all-time high of NT$5.269 trillion (US$175.86billion) by the end of next year, accounting for 37.1 percent of average GNP over the past three years, marginally lower than the 40 percent debt limit.
“There is no comparison between the two countries. Greece is a country facing a debt to GDP ratio of more than 100 percent, while our national debt remains under the debt limit,” Chen said.
Chen said the way the government manages debt “has been in compliance with related rules,” refering to the 40 percent debt limit, the 15 percent ratio of annual public debt taken on by national and local governments compared with revenue in the previous fiscal year and the minimum annual payment requirement of no less than 5 percent of annual tax revenues.
In terms of the stock of debt capped under the 40 percent debt ceiling “there is still room for loans to grow by approximately NT$400 billion,” he said.
Chen said that Greece would be satisfied if it were able to reduce its debt-to-GDP ratio below 100 percent, but as for Taiwan, “we have to obey the rules.”
The draft budget for next year publicized on Thursday showed that the fiscal shortfall for the year stood at NT$214.4 billion, a decline of NT$7.9billion, or 3.4 percent, compared with the previous year.
It was the fourth consecutive year that saw the nation’s fiscal shortfall drop, showing that the government has begun to address the deficit problem, Chen said.