TAIPEI (Reuters) - Taiwan's cabinet warned on Monday the island's security might be at risk after opposition parties passed laws that will require cuts in government spending, including defence, at a time when China has ramped up military activity nearby.
Taiwan's opposition parties, which hold a majority in parliament, last week passed legislation to shift spending from the central government to local municipalities, a move strongly contested by the ruling Democratic Progressive Party (DPP) and thousands of protesters.
The legislation will "seriously weaken the central government's financing," Finance Minister Chuang Tsui-yun said at a media briefing on Monday, adding the government might need to increase debt-financing.
To meet the new funding requirements, the central government will need to cut 28% from a major section of its budget proposal for next year that included T$294.5 billion of the overall defence budget, the Directorate General of Budget, Accounting and Statistics said.
The legislation could "seriously crowd out the defence budget," Taiwan President Lai Ching-te said in a post on Facebook (NASDAQ: META ) over the weekend, adding Taiwan's combat capacity might be "hit deeply".
"What is in jeopardy are the national security and the safety of the 23 million Taiwanese people."
The cabinet in August proposed a 7.7% year-on-year rise for defence spending to T$647 billion, a record high for Taiwan as the island adds more fighter jets and missiles to strengthen deterrence against a rising threat from Beijing.
China, which views democratically-governed Taiwan as its own territory, has ramped up its military pressure to assert those claims, which Taipei strongly rejects.
The government will resort to "every possible administrative remedy" allowed by the constitution to preserve the budget, cabinet spokesperson Michelle Lee told reporters, without elaborating.
She said the cabinet might need to recompile the budget proposal for next year, which is awaiting parliamentary approval.
The DPP lost its parliamentary majority in January elections and is in a stand off with the opposition on several issues.
($1 = 32.6710 Taiwan dollars)