I. Establishment of multiple financial resource channels

1. Maintaining fiscal stability is the foundation of sustainable development for a nation and a long-term objective for our government. In response to policy demands and the promotion of infrastructure projects, the Ministry of Finance manages the national financial resources and has established multiple channels to raise funds adequately. With the measures of resource-broadening and cost-cutting at all levels of our government, the deficit of the Central Government General Budget and Special Budgets decreased to NT$13.6 billion in 2017, falling from NT$228.6 billion in 2012. Since 2018 thanks to the outstanding performance of the Central Government General Budget, there were surpluses of NT$16.7 billion and NT$16.0 billion in our annual budgets in 2018 and 2019, respectively. These surpluses were gained despite the introduction of the Forward-Looking Infrastructure special budget, which we funded for promoting national infrastructure.
2. In order to maintain economic growth momentum, safeguard national security, and respond to the COVID-19 pandemic, several special budgets were compiled between 2020 and 2023, leading to the growth of budgetary deficits. Thanks to the consecutive surpluses after the implementation of the central government’s general budget, the actual deficits in 2020 and 2021 shrank to NT$275.8 billion and NT$142.2 billion, respectively. In 2022, the overall budget shifted from a budgetary deficit to a surplus of NT$68.4 billion. Furthermore, due to better-than-expected revenue execution in 2023, the actual budget deficit situation is expected to be reduced further. In 2024, to cope with the global economic changes and to meet our policy needs, we still expect a moderate expansion of the government expenditure primarily directed towards elevating national infrastructure, fostering innovation in industries with a net-zero transition, strengthening the social safety net, promoting education development, and bolstering national defense and security, in order to maintain the sustainable development of the nation. As a result, the deficit is allocated to be NT$436.4 billion. In order to ensure fiscal stability, we will dedicate ourselves to narrowing this deficit during its actual implementation.

II. Debt ratio management

In recent years, the fiscal situation of the Central Government has improved gradually. The ratio of outstanding debt with a maturity of one year or more incurred by the Central Government to the average of nominal GDP for the previous three years has decreased from a peak of 36.3% in 2012 to 29.6% in 2019, showing a 7-year successive decline. However, in response to the COVID-19 pandemic, we have funded and enlarged the special budget multiple times. The debt to GDP ratio therefore slightly increased to 30.1% in 2020 and to 29.9% in 2021. With economic growth in recent years, the ratio fell to 29.3 % in 2022, and is estimated to be 30.7% in the 2023 budget account and 30.2% in the 2024 budget proposal account. Nevertheless, the debt scale as a whole remains strictly managed. In the future, we will continue to manage debt in a way compliant with The Budget Act, The Public Debt Act, and The Fiscal Discipline Act so as to maintain fiscal stability. (Note: As of the end of August 2023, the debt ratio calculated with actual accounts stands at 27.2%.)

III.International analysis

1. Debt management is reasonable in our country

Our central government’s debts that mature in more than one year as a percentage of GDP were 28.17% in fiscal year 2019, 27.80% in 2020, 26.26% in 2021, and 26.13% in 2022. Compared to the United States’ 115.28%, Great Britain’s 102.97%, Germany’s 46.27%, and Japan’s 221.32% in year 2021, our government debt management appears stable and reasonable.

2. International credit evaluation agencies have given our nation high evaluations

(1)In order to achieve the goals of economic growth and sustainable financial development, we have promoted relevant measures, such as restructuring expenditures and establishing multiple channels for the cultivation of financial resources, so as to further shrink our deficit as well as control the scale of our debt. The World Economic Forum (WEF) announced in “The Global Competitiveness Report 2019” that Taiwan ranks 12th of the 141 economies rated. In “Debt dynamics,” under the category of “Macroeconomic stability,” Taiwan tied for first place with 33 other economies. According to the “World Competitiveness Yearbook 2023,” which was released by the Institute for Management Development (IMD) in Switzerland, Taiwan ranked 6th among 64 rated economies, moving up one place compared to the previous year, and ranked 2nd in the Asia-Pacific region.

(2)Standard & Poor’s Global Ratings on April 26, 2023, affirmed the long-term Issuer Credit Rating on Taiwan at “AA+,” a stable outlook. Fitch Ratings on August 18, 2023, affirmed Taiwan’s long-term foreign-currency Issuer Default Rating “AA,” a stable outlook since 2021. Moody’s Investors Service on September 22, 2022, affirmed Taiwan’s long-term issuer rating at “Aa3,” with the outlook adjusted to stable. The above three international credit evaluation agencies all have affirmed Taiwan’s excellent fiscal performance by demonstrating a prompt and effective economic recovery in coping with the global economic downturn, pandemic outbreak, and inflation pressure while abiding by the relevant loan-cap fiscal rules stipulated in The Public Debt Act, effectively assuring a rapid economic revitalization back to its normal track and showing that Taiwan has a more resilient fiscal capacity than many of its AA-rated peers when facing unforeseen sudden impacts.