Central government revenues come mostly from taxation, customs and duties, and income from government monopolies on tobacco and wines; other revenues are derived from profits realized by government enterprises. Government accounts showed surpluses through the early 1980s.
Public authorities anticipated a growing fiscal deficit throughout the 1990s as Taiwan's six-year development plan required over $300 billion of investment in public infrastructural construction projects and in upgrading industries. In 1996, the government's deficit was equal to 4% of GDP. Growing demands for social welfare spending and increased defense spending (up 20% in 1996/97, the largest rise in over a decade) continued to put pressure on the budget. Outstanding debt reached 16% of GDP in 1998, up from 6% in 1991, and debt service payments consumed 15% of the central budget in 1999. The government was committed to balancing the budget by 2001. Austerity measures included controlling public sector consumption expenditures, limiting expansion of government expenditures, freezing government employment, limiting public employee pay raises, and encouraging private participation in major public projects. The government was also committed to reducing the public sector's role in the economy. National defense expenditures as a portion of the central budget dropped from over 40% in 1960 to 20% in 1999, and were set to fall to 15% in 2000.
The US Central Intelligence Agency (CIA) estimates that in 2002 Taiwan's central government took in revenues of approximately $36 billion and had expenditures of $36.1 billion. Overall, the government registered a deficit of approximately $100 million. External debt totaled $40 billion.