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SOC budget reaches record levels at 26 trillion won

Posted September. 02, 2020 07:37,   

Updated September. 02, 2020 07:37


The government has allocated 26 billion won to social overhead capital (SOC) for next year, 12 percent up from this year. Meanwhile, education spending will decrease as a result of dwindling contributions from local governments.

According to the government on Tuesday, the SOC spending will rise by 11.9 percent from 23.2 trillion won this year to 26 trillion won next year. Its plan is to overcome the economic downturn triggered by COVID-19 by increase spending on SOC and investing proactively in promising industries such as smart logistics and smart cities.

It is seen as an effort to win more votes in by-elections next year and in the presidential election scheduled in 2020, especially considering the government previously said making large investment in SOC is old-fashioned. In 2017 when President Moon Jae-in took office, the government said it would reduce the SOC budget annually by an average of 7.5 percent to 16.2 trillion won next year. The spending on SOC, however, continuously increased every year to reach 17.7 trillion won in 2018 and 18.5 trillion won in 2019 with the government trying to stimulate the economy.

As the tax revenue will drop by 9 trillion won next year, local authorities’ contributions to education spending, which are linked to domestic taxes, will also decrease by more than two billion won. 53.3 trillion won out of the 71 trillion-won education budget will come from the contributions by local governments.

Teuk-Gyo Koo kootg@donga.com