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Better Public Finance

I. Trend analysis

1. Improving deficit ratios at the Central Government

The total deficit of the Central Government General Budget and Special Budgets as a percentage of the GDP went from 3.4% in 2009 to 0.1% in 2017. In 2018, due to economic recovery and realized benefits of taxation adjustments, there was even a surplus between the annual revenue and expenditure, which accounted for 0.1% of the GDP. Government expenditures grew in 2019 to support national construction and government policy, resulting in an estimated budget deficit that would be 0.6% of the GDP. In 2019 and 2020, the estimated budget deficit would be 0.6% and 0.5% of the GDP separately. According to the preliminary estimates, the budgeted deficit is projected to turn into a surplus. Government expenditures grew in 2020 to maintain economic growth and ensure national security, resulting in an estimated budget deficit that would be 0.7% of the GDP. We will work toward in the direction of reducing the deficit.

2.The net increase of the Central Government’s debts has dropped
The debts of the Central Government budget (combining the General and the Special Budget) had a net increase of $410.2 billion in 2010, and the forecasted amount is to drop to $88.8 billion in 2020.

II.Structural analysis

1.Growth in the ratio of tax revenues over annual revenues

Economic recovery and realized benefits of taxation adjustments have led the ratio of tax revenues over annual revenues to grow from a mere 67.7% in 2009 to 82.7% in 2019. Due to large amount of nonrecurring non-tax revenues, the ratio of tax revenues over annual revenues will be 79.7% in 2020, though the tax revenue continues to grow.

2.The ratio of revenues from financing over revenues is under control

In the Central Government General Budget and Special Budgets, the ratios of funds from financing over revenues have declined from 24.5% in 2009 to the budgeted 8.8% in both 2019 and 2020. The ratio in 2019 is projected to be lower than the budget number.

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 29.11% in fiscal year 2019 and will be an estimated 28.55% in fiscal year 2019. Compared to Germany’s 48.6% (2016), the United States’ 99% (2016), Great Britain’s 116.5% (2016), and Japan’s 195.5% (2016), 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 , Fitch Ratings and Standard & Poor's Ratings Services in 2019 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 2019,” which was released by the Institute for Management Development (IMD) in Switzerland, Taiwan ranked 16th among 63 rated economies, moving up 1 place compared to the last year, and ranked 4th in the Asia-Pacific region.

Release date:2019-09-27 Last updated:2020-04-07