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Commercial Times: Deal flexibly with government's financial woes

Commercial Times: Deal flexibly with government's financial woes

According to a budget plan unveiled recently, central government expenditure will reach NT$1.9407 trillion in 2014, up NT$33.1 billion from this year. Revenue, however, is projected to decrease NT$2.5 billion to NT$1.7308 trillion. The government will need to borrow another NT$273.9 billion to cover the shortfall and principal repayment on existing debt. As a result, debt as a percentage of expenditure will reach 14.1 percent, fast approaching the 15 percent ceiling stipulated in the Public Debt Act. By the end of next year, outstanding government debt will reach 38.6 percent of the average gross national product for the latest three years, only two percentage points away from the 40.6 percent ceiling. The financial plight is linked to moves taken by the government to decrease tax rates and increase social welfare spending in recent years. Another problem deserving attention is the poor profitability of state-owned enterprises. It was reported that Taiwan Sugar Corp. will be the only enterprise to contribute to government revenue next year. The oil refinery CPC Corp. and Taiwan Power Company, which were once considered the government's cash cows, are operating at a loss due to efforts by legislators to keep fuel and electricity rates deliberately low. The situation is not normal. There is a need for the government to push for vigorous reform to address the problem. The government should support the corporatization and marketization of state-owned enterprises that have the value to continue to exist. For those enterprises in which state ownership is no longer necessary, the government should speed up their pace of privatization. (Editorial abstract -- Aug. 14, 2013) (By Y.F. Low)


Updated : 2020-12-04 23:10 GMT+08:00