Execute the Public Debt Act to strengthen debt management
1. To support the needs of local government reorganization and to review the overall management and control of public debt, the Public Debt Act, as amended, took effect on January 1, 2014, providing comprehensive mechanisms for debt management and control, as follows.
(1) Establish a Public Debt Administration Committee.
Enact the “Organization Regulations of the Public Debt Administration Committee” and the “Operation Regulations of the Public Debt Administration Committee” to be the legal basis for forming the Public Debt Administration Committee in order to monitor and review self-redeeming public debt, the debt improvement plan, implementation schedule, and related matters.
(2) When the debt of an agency exceeds 90% of its debt ceiling, the agency should submit a debt improvement plan and implementation schedule.
In the spirit of fiscal self-sufficiency, when the debt of the central government, special municipalities, counties (and county-level cities), and townships (and township-level cities) is approaching the legal debt ceiling, the agency should immediately take corrective actions. Therefore, we have established rules to demand an agency, when its debt reaches 90% of its legal debt ceiling, to submit a debt improvement plan and implementation schedule. The plan will be submitted by the central government to the Legislative Yuan for review and examination and reviewed by its own Public Debt Management Committee in order to carry out actions to improve its debt situation.
(3) Publish public debt information according to international standards so as to improve the transparency of debt information.
To improve the transparency of debt information and to make the items that our debt information reveals conform to international rules, we have revealed information about government debts and the amounts drawn down for financial purposes from various funds in accordance with the standards of international organizations on the website of the Ministry of Finance and National Treasury Administration.
(4) Strengthen laws and regulations for debt management.
To improve mechanisms for debt monitoring and management, we announced the amendment of “The Directions for the Reduction or Suspension of the Redistribution Tax Revenues to Municipal or County Governments in the Case of Non-Compliance in the Regulation of Debt” on August 26, 2016, so as to strengthen the compensation mechanism, distinguish the effects between “reduction” and “suspension” of the Redistribution Tax Revenues, as well as implement debt control measures such as executing debt repayment plans.
2. We have established a hierarchical management mechanism based on the level of the ratio of outstanding debts, and we have reviewed the debt situation of local governments on a monthly basis and provided suggestions for improvements in order to prevent situations early, improve situations timely, and handle situations immediately. To strengthen our counseling effectiveness, we held 16 debt management counseling forums at special municipalities and counties (and county-level cities).We continued to hold debt management counseling forums at six counties (and county-level cities) such as Yilan County in 2019. We will provide similar services in the future according to the debt situations of local governments.
1. We started in fiscal year 2014 to publish information about our government debts, and the amounts drawn down for financial purposes from various funds based on standards of international organizations. Since fiscal year 2004, we have published the final accounts of outstanding debt at all levels of government every half year (self-compiled but edited by the Executive Yuan) and final accounts of outstanding debt at all levels of government (edited by the National Audit Office) to show the general debt situation in order to fully reveal fiscal information of governments and effectively raise transparency.
2. The estimated final accounts of long-term debts of all the special municipalities combined (edited by the National Audit Office) for fiscal year 2018 were 4.12% as a percentage of average GDP for the previous three fiscal years. That was 3.53 percentage points below the debt ceiling of 7.65% set by the Public Debt Act. The estimated final accounts of long-term debts of all the counties (and county-level cities) for fiscal year 2018 were $151.7 billion, decreasing by NT$16.2 billion、NT$11.9 billion、NT$7.6 billion and NT$4.1 billion compared to 2014、2015、2016 and 2017 respectively, indicating substantial debt reduction in four consecutive years. Those four consecutive years achieved a real decline in debt burdens.
3. Yilan and Miaoli Counties, with their debts exceeding the debt ceilings, repaid $225 million and $301 million through the end of July fiscal year 2019. They both complied with the debt payment schedule that the Executive Yuan had approved for the end of July fiscal year 2019, with an execution ratio of 56.25% and 100%, respectively. The percentage of the budgeted debt amounts and the actual debt amounts of long-term debt of Yilan County at the end of July fiscal year 2019 were 42.89% and 42.73%, respectively, the long-term debt ratio has now fallen below the warning threshold. From fiscal years 2014 to 2017, the debts of Hsinchu, Nantou, Yunlin, Chiayi, and Pintung Counties exceeded the warning threshold. We have since counseled them, and their debt ratios have now fallen below the warning threshold. We will continue to counsel local governments to improve their debt situations.