The South Korean government is seeking to raise its budget spending for 2010 by 2.5 percent, focusing on expenses aimed at bolstering economic growth and stabilizing the lives of ordinary people.
According to a budget plan released by the Ministry of Strategy and Finance, the nation's fiscal spending, which includes various state-controlled funds, will amount to 291.8 trillion won ($246 billion) next year, compared with 284.5 trillion won earmarked for 2009.
The planned expenditure, however, is smaller than this year's total spending of 301.8 trillion won that includes an extra budget crafted in April to help the nation get over the worst downturn in more than a decade.
"The increased budget will be intended to revitalize the economy, helping to fuel future investments, stabilizing the lives of ordinary people and creating more jobs," the ministry was quoted as saying by Yonhap News Agency after the budget plan was endorsed at an earlier Cabinet meeting. It will be presented to the National Assembly next month for approval.
In the wake of the collapse of Lehman Brothers a year ago, South Korea has rushed to cushion the shocks from financial market turbulence and resulting global recession by expanding fiscal spending, cutting taxes and pushing for other stimulus measures. The central bank also joined the move by slashing its key interest rate to a record low level.
Apparently driven by such efforts, the South Korean economy is making a faster-than-expected recovery and the government claimed it will stick to its "expansionary" macroeconomic policy stance until the economy is on a firmer path to recovery.
According to the ministry, state revenue from tax and fund operations is expected to decline 1.1 percent to 287.8 trillion won, while national debt will grow to 36.9 percent of the nation's gross domestic product from this year's estimated 35.6 percent.
In order to help enhance the fiscal status, the ministry said that it will work "actively" to streamline and enhance the effectiveness of the nation's overall spending process and reduce tax benefits deemed to be "unreasonable." The ministry also aims to lower the debt-to-GDP ratio in the mid-30 percent range by 2013.
The ministry seeks to increase state spending on research and development by 10.5 percent to 13.6 trillion won next year as part of efforts to strengthen the nation's longer-term growth capability. Spending on foreign and North Korea-related affairs will increase 14.7 percent to 3.4 trillion won.
To help low-income and other underprivileged people, the ministry said that it will push to increase spending on health and welfare by 8.6 percent to 81 trillion won, which accounts for around 28 percent of the total budget.
Spending on education, however, is expected to decline 1.2 percent to 37.8 trillion won, while expenditure on smaller companies, industry and the energy sector will shrink 10.9 percent to 14.4 trillion won, according to the ministry.