10% Budget Cut Planned Next Year
By Na Jeong-ju
Staff Reporter
The incoming government will cut budget spending by 10 percent or 24 trillion won next year in a move to restore fiscal health, a major turnaround from the current expansionary fiscal policy.
The plan was revealed by Kang Man-soo, a key economic advisor to President-elect Lee Myung-bak, Tuesday after he met officials of the Planning and Budget Ministry.
``A 10-pecent cut in the state budget can be an unattainable goal, but we can make it by changing the way we think,'' Kang told reporters. ``To reduce expenditure, we will consider selling public firms, downsizing government agencies and reforming pension funds. All efforts should be made to save costs and create a more efficient government.''
During his presidential campaign, President-elect Lee pledged to slash the state budget by 20 trillion won. Kang said the government can save an additional 4 trillion won if it reforms tax policies.
By saving 24 trillion won, the government will funnel 14 trillion won into new economic projects and cut tax by 10 trillion won. It also plans to privatize the Korea Electric Power Corp. and Korea Gas Corporation in stages.
According to the 2008 budget plan, fiscal spending will reach 257.3 trillion won, up 7.9 percent from last year's 238.4 trillion won. The budget growth rate is the highest since 2002 when it stood at 10.5 percent.
Last year, the ministry set up roadmaps for budget spending for the next decade based on the current government's expansionary policies. The plan is expected to be revised.
President Roh Moo-hyun had pursued an expansionary fiscal policy, putting more weight on welfare programs amid a rapid increase in the number of elderly citizens and the widening gap between the rich and the poor. The state budget increased by some 150 trillion won for the past five years.
Under the Roh administration, the number of civil servants increased by about 50,000, and another 50,000 are supposed to be recruited over the next five years.