Next Year’s National Budget Surpassing 200 Trillion Won, National Debt Four Times Higher than During Foreign Crisis

Next year’s budget is to be 131.5 trillion won (based on the general accounts), increasing by 9.5 percent (11.4 trillion won) from this year. The gross expenditure (the total of general and special accounts and funds), recorded to be 208 trillion won, passing the 200 trillion won mark for the first time.

The country’s deficit is 8.2 trillion won, marking one percent of the gross domestic product (GDP), and debts are to be 244.2 trillion won, which is four times higher than they were in 1997 during the foreign exchange crisis.

The government held a cabinet meeting on Friday and settled on the “2005 planning for budget bill and fund management” with the above details, and will turn it in to the National Assembly by October 2.

For next year’s budget, general accounts amount to 131.5 trillion won, special accounts, 64.2 trillion won, and funds, 320.2 trillion won, but excluding the overlapping parts, the total expenditure is to be 208 trillion won, jumping 6.3 percent from this year. Special accounts and funds will rise by 3.0 and 7.3 percent, respectively, from the previous year.

The 131.5 trillion won budget drawn up for general accounts is an increase of 11.1 percent compared to the main budget (118.356 trillion won) with the exclusion of the supplementary budget drawn up this year. The government has decided to issue deficit-financing bonds worth 6.8 trillion won, which is 4.3 trillion won more than the previous year.

Specifically, social welfare was allotted 37 trillion won, education, 25.9 trillion won, national defense, 20.8 trillion won, social overhead capital (SOC), 37 trillion won, farming and fishing villages, 13.4 trillion won, and unification and foreign affairs was allotted 1.9 trillion won.

Some 36.1 trillion won, a 14.5 percent jump, was allotted to support the finance of local districts, and 510.6 trillion won to renovate administrative services, which was increased by 70.8 percent.

The employment expenses for government workers reached 19 trillion won, a six percent increase due to overtime allowance from the 40-hour workweek and an increase in the teaching and police staff.

Regarding next year’s budget, the Ministry of Planning and Budget announced that investments related to expanding growth potential and improving life quality will be given priority support.

However, the budget for social welfare increased by 14.4 percent from the previous year, but investments in SOC rose by only 1.7 percent, and the budget to support small and middle enterprises, on the contrary, decreased by 1.6 percent.

Accordingly, some are pointing out that the government put more weight on a short-term distribution rather than middle to long-term secure for growth potential.

Meanwhile, next year’s tax burden against the GDP is 19.7 percent, lowering by 0.1 percent from this year.

The national burden rate, which is the total of tax burden and social insurance burdens including the national pension, is 25.2 percent, and is increased by 0.2 percent from this year.

Jong sik Kong kong@donga.com parky@donga.com