Highest Ever Budget Spending for First Quarter

During the first quarter (January-March), the government spent a total 43.4 trillion won, resulting in the highest expenditure ever by quarter.

This was followed by the government’s early disbursement of funds to recover domestic businesses by investing in SOC (Social Overhead Capital) and creating more jobs.

According to the Ministry of Planning and Budget (MPB) yesterday, 27.3 percent of the annual budget, some 43.4 trillion won, was spent during the first quarter.

When comparing this with last year’s first quarter, the figure increased by 4 trillion won from 39.4 trillion won. The amount released for the first quarter, which marks 25 percent of the total annual budget, rose by 2.3 percent. Approximately 700 billion won over the originally designated 42.7 trillion won was spent.

The first quarter’s budget expenditures mark the highest ever in both the amount of money spent and the rate at which it was spent.

Factoring into these high expenditures were contributions to the SOC (which stimulates business) of one trillion won over the original designation of 4.4 trillion, resulting in a total of 5.4 trillion won over the first quarter. To support the financial recovery of local cities around the country, the government supplied 3.9 trillion won for local government subsidies, 200 billion more than planned.

2.2000 trillion won was spent on rental home loans, an increase of 300 billion won from the originally designated figure. To compensate land for the development of Pankyo, 1.9 trillion won was spent on funding for the Korea National Housing Corporation and Korea Land Corporation, 500 billion won more than originally planned.

Job creation in public fields to decrease youth unemployment was planned for 180,000 people for the first quarter, but rose to 187,000, increasing by 7,000.

100 billion won less than the originally designated 1.4 trillion to 1.3 trillion won was put toward the support of small and medium enterprises.

MPB announced that during the second quarter, financial conditions will be maintained so that the export-based economic recovery will expand into domestic consumption and facility investment, and the government’s plan to spend 87.2 trillion won (54.8 percent of the annual budget) during the first half of this year will be accomplished.

The early spending for economic recovery is inevitable, but some are pointing out that the government is conscious of the upcoming election and is spending at too fast a rate.

Cho Dong-gun, an economics professor at Myongji University, said “At this time with the upcoming election, how can the government not conduct early budget spending? It is worrying what the government will use to carry out policies after the election when its ‘ammunition’ is lacking.”

Dong-gun also warned, “The means for recovery in which budget spending was chosen can be acknowledged, but this will eventually lead to drawing up additional budget and heavier financial burdens.”

Chi-Young Shin higgledy@donga.com koh@donga.com