11.75 billion for Next Year Budget

The government tentatively set the next year`s budget at 11.75 billion won, a 2.1% compared to this year.

It also plans to balance the budget by spending within its tax revenues without issuing national bonds to mark up for deficits.

Minister of Planning and Budget Park Bong-heum reported the planned directions for 2004 budget to President Roh Moo-hyun.

The government will hold budget consultation meetings among political parties, advisory meetings for budgeting and cabinet meetings before it would announce its final proposal for the budget.

Minister Park explained, “The next year would see a lot of unfavorable conditions for the government budget such as reduced corporate tax revenue, a drop in non-tax government earnings resulted from selling-off of state-run companies. But considering possible financial risks and the nation’s credit ratings, we decided to maintain balanced budget in 2004.”

The government decided to increase much controversial defense budget by 1.4 trillion won or 8% form this year’s 17.5 trillion won, earmarking 18.9 trillion won for the purpose.

“The defense spending accounts for 2.8% of the nation’s GDP. It will be hiked to 2.9% in 2005 and will be on the rise in 2006 and afterwards,” said Minister Park.

The salaries for government employees will be up 3% next year. And additional adjust payment could be made to public servants from a reserve budget reflecting salary hikes in private businesses.

As a result, the actual salary increase for public servants is expected to be 4.8 % next year. According to the Ministry of Planning and Budget, among the estimated tax revenues of 117.5 trillion won, domestic tax revenues will be 111.5 trillion won up from this year`s 7.2 trillion won while non-tax earnings is expected to drop from this year’s 4.8 trillion to reach 6 trillion won.

Kwang-Hyun Kim kkh@donga.com