[EDITORIALS]Wrong budget prioritiesThe government estimated next year’s budget at about 208 trillion won ($181 billion). When we look at the details of the budget, it appears that the administration did not care enough about enhancing national competitiveness and growth potental because of its concern about social welfare and distribution. While spending for social welfare increased by 14.4 percent, the sum for industries and small and medium businesses decreased by 1.6 percent. Investment in social overhead capital increased only by 1.7 percent.
We do not understand why the government is producing new welfare policies day after day. Care for the poor, of course, is necessary. Still, the government should remember that resources are limited and once the budget for social welfare is increased, it cannot easily be reduced later. As the Asia Development Bank pointed out, growth momentum to prepare for the future is necessary now for Korea. Limited resources should not be used for ambiguous purposes. The National Assembly will have to look carefully at the government’s budgeting.
We also worry that the national debt is increasing rapidly. The total debt next year will be around 244 trillion won, four times more than that during the 1997-98 financial crisis. The debts are expected to increase further and reach 296 trillion won in 2008.
The government says Korea’s debt-to-GDP ratio is 23 percent, a figure that is lower than in other developed countries. The figure would rise to 29.8 percent in 2006, when it would peak and fall thereafter, according to government estimates. But we worry that the deficit will be chronic; the economic growth rate is slowing down and tax revenue is decreasing now. Large spending for capital relocation and national defense may leave the government badly off. If a 5 percent growth is not realized next year, the government’s deficit will increase further.
The government budget came from taxes. Next year, an individual will have to pay an average of 3.42 million won in taxes, 240,000 won more than this year. People will suffer more, because they pay more tax when their income decreases.
Trillions of won are wasted on such political projects as Saemangeum reclamation and Yesan airport construction. That waste will lead to unbalanced finances and the weakening of growth potential. Seoul should probe whether there are such wastes, and the Assembly should check the figures.