The legislature yesterday approved amending the Public Debt Act (公共債務法) to allow local governments to increase borrowing without raising the nation’s debt ceiling.
The amendment stipulated that the total outstanding public debt at all levels of government must not exceed 50 percent of the average combined GDP of the previous three years, in lieu of the previous cap of 48 percent of the average GNP of the previous three years.
The change brings regulations in line with international norms, while the total amount the central government is authorized to borrow increasing by about NT$72 billion (US$2.4 billion).
Under the debt limit of 50 percent of the average GDP of the preceding three years, the central government’s debt ceiling was lowered to 40.6 percent, while the debt ceiling for the six special municipalities was increased to 7.65 percent, that of counties and cities to 1.63 percent and that of townships to 0.12 percent. With the changes in debt limits, local governments will be able to take out an extra NT$27 billion.
The debt ceiling imposed on local governments was raised from 45 percent of annual expenditure to 50 percent of the budget, to allow more leeway on loans.
Local governments will need to propose plans to improve their fiscal positions when outstanding debt exceeds 90 percent of the limit.
The ministry estimates that the six special municipalities will be able to raise an additional NT$288.6 billion in total.
Separately, the legislature approved an amendment to the Teacher’s Act (教師法) to spare teachers involved in misconduct from being deprived of the right to teach for the rest of their lives. However, the life ban on teachers involved in sexual assault or severe bullying remains in place.
Under the amendment, teachers suspended from positions for a period of up to four years on misconduct charges as defined by the law will be allowed to apply for reinstatement if they can show that their behavior has changed.
The two-week extra legislative session ended yesterday.
Premier Jiang Yi-huah (江宜樺) expressed his gratitude for the laws passed during the session and said he hoped another extra session would be held to pass the proposed referendum on the construction of the Fourth Nuclear Power Plant in New Taipei City’s (新北市) Gongliao District (貢寮).