Cabinet approves 2027 budget proposal, defense spending at 3.01% of GDP

Taipei, Aug. 20 (CNA) The Cabinet on Thursday approved the central government budget proposal for 2027, which would allocate NT$1.1225 trillion (US$35.3 billion) for defense, equivalent to 3.01 percent of gross domestic product (GDP).

President Lai Ching-te (賴清德) has set a goal of keeping Taiwan's defense budget above 3 percent of GDP while gradually increasing the share to 5 percent by 2030.

The directive came in the wake of China sending warships and warplanes into areas close to Taiwan on an almost daily basis and staging several large-scale military drills encircling the island since 2022.

The 2027 defense spending plan includes NT$691.9 billion in the Ministry of National Defense budget, NT$218.2 billion in special budgets and NT$60.7 billion in nonprofit special funds, according to the Directorate-General of Budget, Accounting and Statistics (DGBAS).

Meanwhile, the defense budget also includes NT$103.8 billion earmarked for military pensions and NT$47.9 billion for the Coast Guard Administration, the DGBAS said, adding that the calculation mirrors the method used by the North Atlantic Treaty Organization (NATO), on which Lai has modeled Taiwan's defense budget planning.

The overall 2027 defense budget accounts for 3.01 percent of national GDP, based on the latest forecast published by DGBAS in August that GDP will reach NT$37.3 trillion. The figure represents a decline as a share of GDP from the 2026 defense budget, which accounted for 3.32 percent of GDP.

The proposed central government general budget totals NT$3.9266 trillion, up NT$891.6 billion, or 29.4 percent, from the NT$3.035 trillion budget for 2026, according to the DGBAS.

The government estimates that revenue in 2027 will total NT$3.9266 trillion, an increase of NT$1.0643 trillion, or 37.2 percent, from the NT$2.8623 trillion budgeted for 2026.

On population-related policies, the government plans to allocate NT$373 billion, including NT$329.5 billion for its family support program, which includes a proposed monthly cash handout of NT$5,000 for children aged 0-17.

On technology policy, NT$229.2 billion has been earmarked for technological development programs, including NT$40.8 billion for AI-related programs.

The proposed budget would be balanced between revenue and expenditure, with NT$179 billion in borrowing needed to finance debt repayments.

The DGBAS said projected outstanding debt at the end of 2027 would be NT$6.8831 trillion, equivalent to 23.4 percent of the average nominal GDP of the preceding three years and below the 40.6 percent ceiling for debt with a maturity of one year or longer.

The Cabinet is expected to submit the budget to the opposition-controlled Legislative Yuan for review by the end of August.