Taiwan increases defence budget by 10%

Taiwan’s government has approved a national defence budget of TWD453.4 billion (USD15.4 billion) for 2021 amid rising tension with mainland China and international economic downturns related to Covid-19. The new budget represents a nominal 10% increase over Taiwan’s 2020 defence allocation of TWD411.3 billion. Janes analysis also suggests that the increase points to a shift in Taiwan’s defence spending strategy.

Analysis 

Even without considering the large increase in supplementary spending, Taiwan’s proposed expansion of its ‘core’ MND funding at a nominal rate almost 1.3 percentage points higher than the previous year would be notable, given the greatly worsened economic environment.

For that robust increase to be accompanied by a ramp-up in resources dedicated to securing a new fighter aircraft suggests a significant change in the island’s defence funding trends.

Funding for Taiwan’s procurement of F-16Vs began to be allocated in a new ‘special budget’ outside the normal MND allocation in late 2019.

While this year the programme was granted around TWD5 billion, 2021’s funding will grow to TWD29 billion and is expected to reach TWD45 billion annually, or over 10% of the MND’s current budget, by 2023. Current plans show spending on the aircraft remaining around this level until 2027.

Including Taiwan’s expenditure on veterans’ affairs (which the state budget reports separately), its defence allocation is now likely to exceed USD19 billion for the first time in 2021 – up from less than USD16 billion in 2018.