The Cabinet yesterday approved the government’s annual budget for next year, with NT$305.9 billion (US$10.2 billion) set aside for defense, the lowest in terms of share of GDP since President Ma Ying-jeou (馬英九) came to power in 2008.
Despite a pledge by Ma when he was running for office that year to increase defense spending to above 3 percent of GDP, the amounts allocated by his administration for defense have steadily declined in recent years.
Under the draft budget, the defense spending budget for next year was 2.54 percent of the projected GDP of NT$14.77 trillion, lower than 2.67 percent in 2011, 2.68 percent last year and 2.71 percent this year.
The proposed budget allocation of NT$305.9 billion for defense projects was an increase of 0.1 percent, or NT$400 million, compared with this year, Directorate-General of Budget, Accounting and Statistics (DGBAS) Minister Shih Su-mei (石素梅) said.
In 2009, 3.05 percent of GDP was allocated in the draft budget for defense spending, the only time more than 3 percent has been allocated for such use in the Ma era.
In the end less than 3 percent of GDP was spent, the year-end audit report showed, Shih said.
With a significant decrease in projected tax revenues next year, the government plans to sell state-owned shares. Shares of Taiwan Semiconductor Manufacturing Co (TSMC), Chunghwa Telecom Co, Mega Financial Holding Co, Taiwan Cooperative Bank (TCB), China Steel Corp and Taiwan Fertilizer Corp are scheduled to be made available.
It will be the first time in five years that the government will try to collect revenues through the sale of state-owned shares, which is expected to bring in revenue of NT$44.1 billion, Shih said.
Shih said that the shares will only be released to three of the nation’s four major funds — the Labor Insurance Fund, the Labor Pension Fund and the Postal Savings Fund — rather than to general investors to avoid market fluctuations while maintaining the government’s control of those companies.
The budget statement for next year projects revenues of NT$1.7333 trillion, a decline of NT$2.5 billion, or 0.1 percent compared with this year, and expenditure of NT$1.9407 trillion, a year-on-year increase of NT$33.1 billion, or 1.7 percent.
To meet the shortfall of NT$209.9 billion and a required repayment of NT$64 billion, the government would take out loans of NT$273.9 billion next year.
The government has earmarked NT$192.5 billion in public construction projects for next year, an increase of NT$17.5 billion, or 10 percent, compared with this year, to stimulate economic growth, Shih said.
The DGBAS said the government’s outstanding debts would rise to an all-time high of NT$5.4 trillion, or 38.7 percent of the average GNP for the past three years, still lower than the 40 percent debt limit.