Posted September. 03, 2009 08:22,
The Lee Myung-bak administration has scrapped its campaign pledge of achieving seven percent economic growth and per capita income of 40,000 U.S. dollars, and making the domestic economy the world`s seventh largest.
A draft plan on budget spending obtained by The Dong-A Ilbo yesterday readjusted the growth projection to four to five percent. The government had used seven percent last year when it devised its budget management plan for 2008 to 2012.
The administration forecast economic growth of around four percent next year and that the economy will achieve its potential growth rate of five percent after 2011. The potential growth rate refers to growth a country can achieve without producing adverse effects such as inflation.
In addition, the government seeks to keep the national debt under 40 percent of GDP and reducing it to the mid-30 percent level by 2013, while maintaining aggressive budget policy next year.
Amid increased state spending to bolster an economy hit hard by the global economic crisis, the government had predicted that the national debt ratio will grow from 30.1 percent of GDP last year to 35.6 percent this year. The ratio is unlikely to return to last years level until 2013, the plan said.
The plan said a balanced budget is possible in 2013 or 2014 given the return to a surplus in 2002, five years after the Asian currency crisis hit the country. The government had initially expected a balanced budget by 2012.
Based on the draft, the government will submit a final plan and submit it to parliament along with next years budget as early as the end of this month.