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Government sets out 2002 budget plan

Posted March. 28, 2001 17:45,   

한국어

``In a word, I am feeling uneasy,`` said an official of the Ministry of Planning and Budget.

Budget officials said it is very difficult to work out next year`s budget because revenues are limited due to the economic slump at a time when expenditures are growing.

The 36 government offices have demanded 64.8 percent more budget funds for next year, or 86.3 trillion won. Of course, the government cannot allot the money as requested. They needed to be slashed, although there would be a limitation. Some worry that it would be difficult to realize a balanced budget because two national elections are scheduled next year.

At least 10 trillion won is required:

In 2002, the government is required to set aside at least 12 trillion won. Local government subsidies, which are equivalent to 28 percent of domestic taxes, amount to 5.5 trillion won. Last year, the government used 40 trillion won in public money and interest payments for it is 1.5 trillion won.

Also, interest for 2.4 trillion won in national bonds to be issued this year would be about 240 billion won. The funds required to support the separation of dispensary from medical practice in 2002 is estimated at 500-600 billion won. Research and development expenditures are pegged at 5 percent of the entire budget, or about 1 trillion won. Government also set aside 1.5 trillion won to raise the salaries of public servants to the level of private firms by the year 2004. Besides, the government needs 300 billion won for free middle school education and over 100 billion won for basic household subsidy. Government is required to pay the deficit of the national medical insurance program, which is expected to reach 4-5 trillion won this year.

Government policy:

The government said that it will squeeze expenditures in drawing up next year`s budget. In particular, it plans to drop the budget for new projects that are intended to compete with private corporations. Also, it called for each ministry to work out a separate revenue-generating plan in case of tax reductions or increased expenditures.

Budget deficit would be inevitable with elections:

It has to be seen if such a direction of the government will be followed. The plans for new projects or continuing projects submitted by each government ministry look excessively enthusiastic. Activities of corporations, the largest revenue source, have been weakened due to economic slowdown, but the government has an aggressive budget plan. If the government were focusing on an election-oriented budget plan, it would be inevitable that expenditures would exceed revenues.



Choi Young-Hae moneychoi@donga.com