2009 Budget Geared to Boost Economic Growth

Next year’s government budget is set at 273.8 trillion won, up 6.5 percent from this year.

Announcing the 2009 budget plan yesterday, the government also froze the number of officials and their wages for the first time in history. The budget bill for 2009 will be submitted to the National Assembly after a final agreement is reached in a Cabinet meeting.

Finance and Strategy Minister Kang Man-soo said, “The budget plan is intended to strike a balance between growth and distribution while creating jobs and securing growth potential.”

The Lee administration’s first budget plan shows the incumbent government’s economic principles. The rise of 6.5 percent is lower than the hike of 7.9 percent for this year’s budget implemented by the previous Roh Moo-hyun administration.

The budget hike for 2009 is also smaller than the real economic growth and inflation rates, both of which are expected to reach a combined 7.4 percent next year.

Priority went to securing growth potential in setting up the budget plan. By sector, the government plans to increase its investment in R&D 10.8 percent and that in infrastructure 7.9 percent from a year ago.

The Roh administration had raised infrastructure investment 2.5 percent each year.

In a surprise, the Lee administration raised social welfare spending nine percent, saying it will provide benefits to more people by reducing overlapping support.

The fiscal deficit will decrease 10.4 trillion won next year, down from 11 trillion won this year. Korea’s fiscal health is expected to improve next year as its fiscal deficit will be an estimated 333.8 trillion won and the share of fiscal deficit in GDP will fall from 32.7 percent this year to 32.3 percent next year.

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