[EDITORIALS]Budget Adjustments NeededThe proposed 2002 budget that the government announced Tuesday is more like a draft than those of past years; the proposal was drawn up before the Sept. 11 terrorist attacks in the United States occurred. The government also said that it would expand its fiscal expenditures depending on the severity of the economic downturn at home and abroad. Nevertheless, we should point out some fundamental problems in the 2002 budget proposal.
The government maintains that the budget plan aims at "catching two rabbits" by striking a budget balance and also stimulating the sagging economy. However, a close look at the proposal shows that such a statement is unrealistic and exaggerated.
To begin with, it must be pointed out that budget rigidity has reached an alarming level. By that we mean that the allocations for payroll costs of government employees, grants to regional autonomous governments, education spending and interest payments on government debt amounts to 57 trillion won ($43.5 billion), more than half of next year's budget of 112.6 billion won. Adding to that rigidity, interest payments on government debts are growing 13.4 percent a year, compared to a 6.9 percent increase in the entire budget.
The more rigid the budget, the less fiscal resources are available for new projects. Although the government is planning a 6-percent increase in infrastructure spending, in addition to last year's 5-percent hike, it is hard to say that the increase will boost the economy. Moreover, if the government has to spend more because of the fallout from the terror attack, it will be impossible to meet its target of balancing the budget in 2003.
Two things must be done. First, a micro-level review of every government project must be carried out during the parliamentary deliberation process. Second, the government must rethink its unattainable goals and election promises. For example, Seoul must consider abandoning the target of balancing the budget within two years, ask the public's understanding of the withdrawal and present a new fiscal plan.
It may be a painful task, but that could well be the recipe for preventing a bigger failure.