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Measures for maintaining fiscal stability

I. Tax administration measures

  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$228.7 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$275.7 billion and NT$142.2 billion, respectively. In 2022, the overall budget further shifted to a surplus of NT$69.5 billion. Furthermore, due to the good execution of revenue in 2023, the overall budget deficit was significantly reduced from NT$612.1 billion to NT$222.9 billion after including the special budgets . In 2024, the overall budget deficit (including the supplementary budget proposal) is allocated to be NT$490.4 billion. Additionally, to align with current policy priorities, the budget in 2025 will expand expenditures, primarily focusing on balancing Taiwan's infrastructure, implementing cross-domain innovative net-zero transformation, establishing a comprehensive social safety system, investing in future generations, building a healthy Taiwan, and strengthening national defense and security. In 2025, the overall budget deficit is allocated to be NT$178.9 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 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 29.4 % in 2022, and continued to fall to 28.3% in 2023; it is estimated to be 29.7% and 28.6% based on in the 2024 budget account (including the supplementary budget proposal) and the 2025 budget proposal account, respectively. 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 2024, the debt ratio calculated with actual accounts stands at 26.0%.)

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, 26.35% in 2021, 26.11% in 2022, and 25.73% in 2023. Compared to the United States’ 110.15%, Great Britain’s 100.75%, Germany’s 45.95%, and Japan’s 214.27% in year 2022, our government debt management appears stable and reasonable.

  2. Establishment of after-sale repurchase mechanism of national land

(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 2024,” which was released by the Institute for Management Development (IMD) in Switzerland, Taiwan ranked 8th among 67 rated economies. Among economies with a population of more than 20 million, Taiwan ranked 1st for a consecutive four years.

(2)Moody’s Investors Service on April 30, 2024, affirmed Taiwan’s long-term issuer rating at “Aa3,” a stable outlook. Standard & Poor’s Global Ratings released a report on Taiwan’s sovereign credit rating on the same day, stating the long-term Issuer Credit Rating on Taiwan is “AA+,” with a stable outlook. Fitch Ratings on August 14, 2024, affirmed Taiwan’s long-term foreign-currency Issuer Default Rating “AA,” a stable outlook since 2021. The above three international credit evaluation agencies all have affirmed Taiwan’s excellent fiscal performance in coping with uncertainties such as geopolitical risks, inflation pressure, and the deferred effects of tightening monetary policy 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.

Issued:Dept. of Planning Release date:2024-09-19 Last updated:2025-02-04 Click times:8187