TAIPEI (Taiwan News) —Taiwan’s long-term issuer credit rating was raised to AA+ from AA by S&P Global Ratings on Friday (April 29), while its outlook was assessed as stable.

Last April, Taiwan’s long-term issuer credit rating was raised to AA from AA-. It has been about 21 years since the New York-headquartered credit rating agency downgraded Taiwan from AA+ in 2001.

The agency affirmed that Taiwan’s fiscal management has been flexible and well-executed, while its strong economic performance will effectively alleviate the need for large-scale financial support measures, according to the report.

However, considering the special budgets for the COVID-19 pandemic and national defense, the island nation's budget deficit is expected to reach a peak of 3.6% of GDP in 2021 and decline to 1.5% in 2022, with a gradual downward trend thereafter, the report added.

The annual report also pointed out that Taiwan’s economy has benefited from robust demand for semiconductor products. In addition, stable government finance and relatively moderate price hikes have helped the authorities reduce the cost of debt and maintain strong economic growth trends.

Despite Taiwan's export-oriented economy facing challenges due to rising geopolitical risk, namely tension across the Taiwan Strait, this should not affect its manufacturing sector.

In a statement, the Ministry of Finance (MOF) said that in light of the war between Russia and Ukraine that has pushed up inflation and the global epidemic, MOF will actively reduce the tax burden on commodities and implement relief and revitalization measures, to facilitate the country’s economic stability and resiliency.

Meanwhile, the ministry will exercise prudent management of national finances and launch appropriate tax reforms to promote development, the statement added.