29 July 2011

Taiwan: We Will NOT Raise Debt Limit


From:  Taiwan Daily

Ministry of Finance rules out raising Taiwan debt limit

Publication Date:07/29/2011

Source: Economic Daily News

The Ministry of Finance is not considering raising the government’s debt ceiling, MOF Minister Lee Sush-der said July 28.

“We could work with the private sector on major infrastructure projects as a way to reduce public spending,” Lee said, adding that Taiwan has no foreign debt as the EU and U.S. do.

Taiwan cleared all its foreign debt in June this year, according to Lee. The government’s outstanding debt at home will be about NT$4.92 trillion (US$170.8 billion) by the end of 2011 and 70 percent of it is with state-run banks, Lee explained.

“Our problem is much less complicated compared to the West,” the minister said.

Lee was responding to opposition criticism that the government has accumulated too much debt over the past few years while slashing tax returns.

“Over the past three years, government coffers have seen NT$75.07 billion less in tax revenue,” Lee said, stressing that the tax reduction was designed to revive the economy and balance the gap between rich and poor.

Lee admitted, however, that Taiwan’s tax burden ratio, which stood at 11.9 percent in 2010, is quite low. “Even so, our infrastructure investment increased from NT$16.2 billion in 2008 to NT$224.5 billion last year without imposing extra taxes,” Lee said.

“The national debt will not exceed the legal limit,” Lee stressed. “We can re-examine the government’s expenditures and seek more public-private ventures to reduce the financial burden.”

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