Budget Reduction Planned to Restore Fiscal Soundness

The Korea Times

The Korea Times

National

Sun, December 10, 2023 | 14:43

Presidential Inauguration

Budget Reduction Planned to Restore Fiscal Soundness

Posted : 2008-02-25 22:11

Updated : 2008-02-25 22:11

By Lee Hyo-sik
Staff Reporter

The new government plans to cut state budget by 10 percent next year through the removal of wasteful spending in a bid to restore fiscal health.

Kang Man-soo, the nominee for the Lee Myung-bak Administration's first planning and finance minister, said a 10-pecent cut in the state budget is an unattainable goal.

He said to reduce expenditure, the new government will consider selling public firms, downsizing government agencies and reforming pension funds, adding all efforts will be made to save costs and create a more efficient government.

During his presidential campaign, President Lee pledged to slash the state budget by 20 trillion won. Kang said the government will save an additional 4 trillion won if it reforms tax policies.

The presidential transition committee said the Roh Moo-hyun Administration wasted over 10 trillion won in budget over the past five years. It said it analyzed about 200 cases that the government wasted 10.6 trillion won in budget-execution, from drawing up the budget to supervising state projects.

The Roh administration 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. Also, the number of civil servants increased by about 50,000, and another 50,000 are expected to be recruited over the next five years.

As a major turnaround from the current expansionary fiscal policy, the next government plans to reduce budget spending by 10 percent, or 24 trillion won, in 2009 by eliminating wasteful state spending.

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.

By saving 24 trillion won next year, the new government plans to funnel 14 trillion won into new economic projects and cut taxes by 10 trillion won. It also plans to privatize the Korea Electric Power Corp. and Korea Gas Corp. in stages.

Last year, the Ministry of Planning and Budget set up roadmaps for budget spending for the next decade based on the current government's expansionary policies. But the new administration is widely expected to revise the plan.

leehs@koreatimes.co.kr