Go to contents

300-Trillion-Won Price Tag Seen for Roh’s Plans

Posted August. 22, 2004 21:55,   


The government is expected to need more than 300 trillion won to fulfill the Roh Moo-hyun administration’s middle- and long-term goals. About 179 trillion out of the total expenditure is going to be extracted out of the government budget, placing great pressure on the nation’s finances.

The following is the breakdown of the major expenditures in the “Roadmap,” as the administration’s plan is known, based on reports submitted by the 12 presidential aides groups, the committees on governmental affairs:

1. Push to make Korea the logistics center in northeast Asia: 14.6 trillion won

2. Five-year plan for well-balanced national development: 115.9 trillion won

3. Cost of building the new administrative capital: 45.6 trillion won

4. Investment and loan program for agricultural and fishing provinces: 119.3 trillion won

5. Promoting building culturally-based cities: 2 trillion won

6. Infant rearing support: 2 trillion won

7. Subsidies for children of famine: 1.4 trillion won

If estimated considering the time period of each project and the governmental budget source (179 trillion won total), about 25.6 trillion won on average will be required each year from 2005 to 2008. This expenditure, based on the general government financial account, is equal to 21.6 percent of the government budget (118.4 trillion won) of fiscal year 2004.

Furthermore, the budget pressure will very likely increase, since the estimate has only counted officially announced projects, and there are some Roadmap expenses that have not yet been calculated.

Also, the government plans to increase national defense expenditure to about 24 trillion won by 2014 in consideration of the relocation of U.S. troops. And the 6-trillion-won ticket for relocating the U.S. 2nd Infantry Division, presently located in Yongsan, Seoul, will intensify the government’s budget pressure.

In order to boost the economy, the government plans to implement an “expanding budget” and to issue national bonds starting next year.

Some have expressed doubts about the government’s financing capacity needed for executing its Roadmap.

In response to these doubts, one government official said, “The government will save about 5 percent of its annual budget by using a “top-down” budgeting process starting next year, which allows it to easily assign a budget to a task, and increase the volume of the whole budget--general accounting, special accounting and endowments--by 6 to 7 percent, assuming an annual economic growth rate of 5 to 6 percent. With these measures, we don’t see a big hurdle to financing.”

Jung-Hun Kim jnghn@donga.com kong@donga.com