Government approves NT$410 billion emergency budget
By our staff
In response to potential economic shocks from global instability and US tariffs, the Taiwanese government has given the nod to a NT$410 billion (approximately US$12.6 billion) special budget. This budget aims to fortify the nation's economy and national security.
One of the primary objectives of the budget is to aid local businesses in handling the impacts of US tariffs on their industrial and agricultural sectors. To accomplish this, an extra NT$5 billion will be added to the NT$88 billion package approved earlier this month.
A significant portion of the budget, around NT$100 billion, will be earmarked for Taiwan Power Company (Taipower), as stated by Premier Cho Jung-tai at a news conference. The external assistance will help Taipower cope with a staggering estimated loss of NT$420 billion through the end of 2021.
With this new funding, the government hopes to keep consumer prices stable and shield Taiwanese industries and the broader economy from the whims of global financial fluctuations.
Another NT$150 billion is allocated to bolster Taiwan's national security measures. These efforts include strengthening coastal patrols, advancing uncrewed aerial vehicle infrastructure, and upgrading IT and communication systems.
A considerable part of the budget, NT$167 billion, will be channeled towards social welfare programs such as subsidizing national health insurance, labor insurance, and providing funds for employment stabilization, talent cultivation, and care services for disadvantaged groups.
The government intends to finance the special budget using its accumulated fiscal surplus, although it has allowed for borrowing if necessary. Taiwan's fiscal surplus has grown to NT$358.9 billion over eight years, so the government has no immediate plans to incur new debt.
The budget is still subject to formal approval from the legislature. If approved, the Cabinet will have the authority to allocate the NT$410 billion over the course of the next 33 months and submit special budget plans to the legislature for their approval.
Executive Yuan Secretary-General Kung Ming-hsin believes that this budget could push Taiwan's GDP growth to 2.9 percent or higher this year, based on estimates from the IMF. However, Taiwan's economy faces significant risks, with GDP growth estimates as low as less than 2 percent this year due to global financial uncertainty. Multiple think tanks have lowered their growth forecast by 0.4 to 1.5 percentage points as a result of the US' proposed 32% tariffs on imports from Taiwan, despite a 90-day deferment.
Enrichment data:
This NT$410 billion special budget focuses on fortifying Taiwan's economic resilience and national security. Notable allocations include:
- Economic Support:
- Subsidies for industries and agricultural sectors affected by US tariffs: NT$93 billion.
- Assistance for Taiwan Power Co. (Taipower) to address financial losses and prevent electricity rate increases: NT$100 billion.
- National Security:
- Enhancement of coast guard operations, drone infrastructure, and IT communication upgrades: NT$150 billion.
- Social Support:
- Subsidies for national health insurance: NT$20 billion.
- Support for labor insurance: NT$10 billion.
- Additional funds for employment stability, talent cultivation, and services for vulnerable groups: Additional funds.
- The Taiwanese government is proposing to use part of the NT$410 billion special budget, approved to boost resilience and security, to aid local businesses in handling the impacts of US tariffs, thereby upgrading their industrial and agricultural sectors.
- In an effort to bolster Taiwan's national security, the government has earmarked NT$150 billion from the special budget towards enhancing coastal patrols, advancing uncrewed aerial vehicle infrastructure, and upgrading IT and communication systems.
- Recognizing the importance of social welfare, the government has allocated NT$167 billion from the special budget towards social programs such as subsidizing national health insurance, labor insurance, and providing funds for employment stabilization, talent cultivation, and care services for disadvantaged groups.
