Budget's Growth Planned for 10%

The increase in the national budget for next year will be kept to the minimum, the government said Tuesday.

A 10 percent increase in the budget planned for 2001 will primarily be used to plug the deficit in the national health insurance program and interest payments on funds raised to bail out troubled financial institutions, according to the cabinet. The ministers also decided to set aside funds for presidential and local elections and middle school education, which is to become state-funded beginning next year. The final tab is expected to grow to 110 trillion won ($84 billion) from this year's 100.2 trillion won, the ministers said.

The budget is formulated on a gloomier forecast for next year. "We are forecasting a very difficult year with a possible decline in tax revenue," an official at the Ministry of Planning and Budget said. "The budget will contain considerable moderation in spending, but there will be inevitable increases in expense."

The government will now begin a comprehensive review of existing policies and plans to find ways to cut spending or find less costly alternatives. Appropriations for projects that may overlap with private initiatives, such as the construction of athletic and educational facilities, will be cut significantly, and research and development projects and information technology assistance programs will also be reconsidered, the planning official said.

Various tax incentives of marginal utility will be largely cut back, and issuance of government bonds will also be reduced. Various temporary social security programs introduced in the wake of the financial crisis of 1998 and the more recent economic downturn will also be put to an overall review.

The government will ask ministries and public organizations to freeze personnel and other basic expenses and limit total project increases to 10 percent.

A comprehensive budget guideline will be delivered to individual ministries and other government entities by the end of the month.

by Lee Hyo-joon