With the government's fiscal status having improved significantly as the economy has recovered, the Ministry of Finance vowed to achieve fiscal balance by 2011, according to a ministry statement released on its Web site.
The ministry's response came after the Standard & Poor's Ratings Services said on Wednesday that Taiwan's sovereign credit ratings outlook remained "negative," on the grounds that Taiwan's fiscal position is expected to remain "vulnerable to politics and a lower growth trend" and that "fiscal reform measures are still insufficient to address longer-term budgetary pressures."
The ministry said in the statement that the government has since April 22, 2003 implemented fiscal reforms consisting of 60 short-term, medium-term and long-term measures, 29 of which have achieved significant results.
Thanks to the recovering economy, the government received NT$53.2 billion (US$1.6 billion) in excess of the target revenue amount last year, the first time since 1999 that the revenues have reached the target.
This year, tax revenues received by the government had accounted for 107.6 percent of the target amount as of the end of last month, with the government expecting to receive approximately NT$110 billion in excess of the target for the whole year, the ministry said.
The increase in tax revenues, together with the government's belt-tightening measures, is expected to narrow the fiscal deficit for this year to NT$125 billion, compared with the NT$274.7 billion previously projected by the government, the ministry said.
"For this [2005] fiscal year, the government's spendings may exceed incomes by NT$125 billion, a substantial cutback of around NT$150 billion from an earlier estimated NT$274.7 billion, which shows that the government's fund shortages have improved," the statement read.
As for the budget plan for next year (currently being reviewed by the Legislative Yuan), the growth of the projected expenses is minus 0.5 percent, while the growth of the projected incomes is 5.3 percent, the ministry said.
The decrease in projected expenses and increase in projected incomes have thus kept the projected deficit below NT$200 billion, according to the statement.
Government debts payable is expected to amount to NT$3.9 trillion at the end of next year, accounting for 35.6 percent of the average gross national product for the previous three years, the ministry said.
This will mean an increase of 1.3 percentage points from the 34.3 percent for this year, which will be the lowest increase rate in four years, the ministry added.
The taxation reforms currently being carried out by the government, which include the introduction of minimum income tax rates targeting high-income earners, will help enhance tax fairness and ensure the stability of government revenue, the statement concluded.
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