By Lee Hyo-sik
Staff Reporter
The government is considering using part of its defense budget to finance increasing inter-Korean economic cooperation.
According to an internal memo produced by the Ministry of Planning and Budget, the government is also planning to create new taxes or issue lotteries to raise funds for implementing a range of inter-Korean economic projects and providing aid to the Stalinist state.
In a memo, the ministry detailed several possible ways to raise funds, saying that the government may need to come up with more financial resources if the summit brings about a number of large-scale economic cooperation projects between the two Koreas.
It first suggested that the government borrow funds from state-run banks and companies. Or, it could spend part of 895 billion won earmarked for its official development assistance (ODA) next year.
It also said the government may consider diverting part of the defense budget to finance inter-Korean projects.
About 26.7 trillion won was allocated for the defense budget next year, up 9 percent from this year, despite eased geopolitical risks associated with North Korea.
The Defense Ministry said a significant increase in its budget is necessary as the country needs to modernize its forces to prepare for uncertain security conditions in Northeast Asia.
However, the Planning and Budget Ministry downplayed the significance of the memo, saying that the contents were just various options that could be contemplated for the long-term.
``It's true that there was a memo. But it's just an internal one for long-term review,'' a ministry spokesman said. ``We are just at the initial stage of collecting opinions from various fields.''
Also, the memo indicated that the government may contemplate creating new taxes, which could be dubbed as either a ``peace tax'' or ``unification tax,'' as well as issuing lotteries and bonds to raise funds for inter-Korean economic cooperation.
The funds for facilitating economic and humanitarian exchange with North Korea increased by 50 percent to 750 billion won next year from this year's 500 billion won.