Gov't aims to achieve fiscal surplus in 2016

The government will seek to attain a fiscal surplus and cut national debt to below 30 percent of gross domestic product (GDP) in 2016, the finance ministry said Wednesday.

Reporting its 2012-16 fiscal management plan to parliament, the Ministry of Strategy and Finance said the government aims to regain a budget balance in 2013 and keep it until 2015 before turning its fiscal balance into a surplus in 2016.

Based on the improved fiscal balance, the government will also target to lower the ratio of national debt to GDP to under 30 percent, compared with 35.1 percent last year, the ministry said.

The government posted a fiscal deficit of 11.5 trillion won ($10.1 billion) in the first half of the year, far larger than a deficit of 2.3 trillion won a year earlier, as it increased spending to bolster the slowing economy.

The plan also calls for increasing the government's spending by more than 126 trillion won, or 7.2 percent, over the next five years. The planned expansion marks a significant growth from a 4.8 percent expansion earlier planned in the ministry's five-year plan released in 2011.

Under the new five-year plan, the government will focus its spending on creating new growth engines and improving the country's welfare system.

Despite such a large increase in its spending, the government said the growth of its income will be slower than earlier expected largely due to worsening economic conditions and exports will, in turn, lead to lower growth of tax revenues, the largest single source of government income.

The finance ministry earlier forecast the country's economy, in terms of gross domestic product, would grow 3.7 percent this year and 4.5 percent in 2013. It has revised down the outlook to 3.3 percent for 2012 and 4.3 percent for next year.

To increase its overall income, the ministry said it will realign the country's tax system and shed light on unreported income to expand tax revenues.

Measures to increase national income will also include the liquidation of government assets, mostly in stocks and real estate properties, according to the ministry. (Yonhap)