Taipei: 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).
According to Focus Taiwan, President Lai Ching-te 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. This directive follows China's frequent deployment of warships and warplanes near Taiwan and several large-scale military drills encircling the island since 2022.
The 2027 defense spending plan includes NT$691.9 billion for the Ministry of National Defense, NT$218.2 billion in special budgets, and NT$60.7 billion in nonprofit special funds. The Directorate-General of Budget, Accounting and Statistics (DGBAS) also noted that the budget includes NT$103.8 billion for military pensions and NT$47.9 billion for the Coast Guard Administration. This calculation mirrors the method used by the North Atlantic Treaty Organization (NATO), which has been a model for Taiwan's defense budget planning.
The overall 2027 defense budget accounts for 3.01 percent of national GDP, based on the latest forecast by DGBAS in August, which estimates GDP will reach NT$37.3 trillion. This represents a decline 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.
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 proposes a monthly cash handout of NT$5,000 for children aged 0-17.
For 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 aims for a balance between revenue and expenditure, with NT$179 billion in borrowing needed to finance debt repayments.
The DGBAS projects that outstanding debt at the end of 2027 will be NT$6.8831 trillion, equivalent to 23.4 percent of the average nominal GDP of the preceding three years, remaining 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.