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Measures for maintaining fiscal stability

I. The establishment of multiple financial resource channels
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$439.2 billion in 2009. Furthermore, due to the result of economic recovery and tax system adjustments, there were surpluses in 2018 and 2019, in the amounts of NT$15.5 billion and NT$16 billion, respectively. In 2020 and 2021, three special budgets, namely the Forward-Looking Infrastructure; New Fighters Acquisition; and Prevention, Relief, and Revitalization Measures for Severe Pneumonia with Novel Pathogens, were drawn. The deficits of the annual 2020 and 2021 budgets are projected to be NT$373.8 billion and NT$409.5 billion, respectively; nonetheless, we will continuously make efforts to reduce these deficits.

II. Debt ratio management
In recent years, our fiscal situation of the Central Government has been improved gradually. The ratio of outstanding debt with a maturity of 1 year or more incurred by the Central Government to the average of nominal GDP for the previous 3 years has decreased from a peak of 36.3% in 2012 to 29.7% in 2019, showing a 7-year successive decline. Nevertheless, due to the numbers of special budgets in progress, this ratio is projected to grow to 31.2% and 32.3%, respectively, in 2020 and 2021, which is still under control. 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.

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 was 28.15% in fiscal year 2019 and will be an estimated 29.29% in fiscal year 2020. Compared to Germany’s 39.6% (2018), the United States’ 90.5% (2018), Great Britain’s 85.7% (2018), and Japan’s 198.4% (2018), our government debt management appears reasonable.
2. International credit evaluation agencies have given our nation high evaluations
In order to give consideration to both a lively economy and healthy public finance, we have been promoting 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. Moody's Investors Service in 2020, Fitch Ratings and Standard & Poor's Ratings Services maintained a "stable" outlook on Taiwan's sovereign rating. The World Economic Forum (WEF) announced in its "The Global Competitiveness Report 2019" in 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. In accordance with the “World Competitiveness Yearbook 2020,” which was released by the Institute for Management Development (IMD) in Switzerland, Taiwan ranked 11th among 63 rated economies, moving up 5 place compared to the last year, and ranked 3rd in the Asia-Pacific region.

Issued:Dept. of Planning Release date:2019-12-31 Last updated:2020-12-31 Click times:283