MOF vows to continue fiscal restructuring
July 27, 2014, 12:01 am TWN
TAIPEI--The Ministry of Finance (MOF) has vowed to continue its efforts to push for fiscal restructuring to improve the state of Taiwan's finances and eventually strengthen the country's global competitiveness.
The MOF said among the measures it will take to restructure the country's finances, it will keep a close eye on the government's debt ceiling by gradually cutting the budget deficit, but will also seek more alternative sources to raise the government's revenue.
In May, the Legislative Yuan approved a bill submitted by the ministry to raise taxes for the wealthy but lower the tax burden for the less privileged. The bill is aimed at making the country's fiscal conditions healthier.
The Executive Yuan said the new fiscal restructuring law is expected to help the government raise its tax revenue by about NT$64 billion (US$2.13 billion) a year.
The MOF's ambitions to continue to improve the country's fiscal health came after Fitch Ratings, one of the major international rating agencies, affirmed Taiwan's Long-term Foreign and Local Currency Issuer Default Ratings (IDRs) at "A+" and "AA-", respectively.
At the same time, the outlooks on the Long-Term IDRs are stable, reflecting the rating agency's assessment that upside and downside risks to the rating are currently balanced.
In addition, Fitch has affirmed the ratings of Taiwan's Country Ceiling at "AA", and Short-Term Foreign Currency IDR at "F1." These ratings indicate that Taiwan's financial and economic conditions are sound.
Fitch said the government's budget deficit is expected to fall to 1.5 percent of Taiwan's gross domestic product in 2016 from a peak of 2.3 percent of GDP seen in 2014 after implementing the newly minted multi-year government fiscal restructuring program.
The rating agency said "the risk of contingent liabilities from non-profit special funds will remain low," in Taiwan.
Fitch said the ratio of Taiwan's gross general government debt to the country's GDP will start to fall in 2016 from a level of closer to 50 percent expected for 2014 and 2015. It said the ratio is expected to fall to 40 percent by 2023.