(Sep 01, 2009) The nation saw a decline in the central government’s defense budget request for the second consecutive year since the Chinese Nationalist Party (KMT) took office in May last year.

Based on the central government’s budget statement sent to the legislature for deliberation in the upcoming session, which starts in the middle of this month, the projected defense expenditure for next year was set at NT$288.8 billion (US$8.78 billion), accounting for roughly 3 percent of the nation’s GDP.

The amount fulfills President Ma Ying-jeou’s (馬英九) promise to invest no less than 3 percent of the nation’s GDP in national defense, but it represented a decline from NT$308.2 billion last year and NT$325.6 billion in 2007.

It said in the budget statement that the drop in the defense budget was mainly a result of lower demand for procurement of ammunition, components and fuel.

The budget statement shows defense spending taking the third-largest share of the government budget at a combined 16.6 percent, following expenses for education, scientific research and cultural development of 20.3 percent, or NT$354 billion, and social welfare at 18.7 percent, or NT$325.7 billion.

The government set the annual income budget at NT$1.552 trillion, down NT$121.2 billion, or 7.2 percent, from this year, while the annual expense budget was set at NT$1.7398 trillion, down NT$69.9 billion, or 3.9 percent, from this year.

To make up for the shortfall and raise funds to expand public construction, implement more flood control projects and support post-Typhoon Morakot reconstruction work, the government will take out nearly NT$500 billion in loans next year, a record for a single year.

As a result, it projected that government debt would reach NT$4.55 trillion, accounting for 35.9 percent of the GDP average over the previous three years, but below the legal ceiling of 40 percent.

DEFICIT: To cover the budget shortfall and raise funds for reconstruction, the government proposed taking out nearly NT$500 billion in loans, a record for a single year

By Shih Hsiu-chuan
STAFF REPORTER
Taipei Times