Ballooning budget

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Ballooning budget

The government seems to have drawn up a draft budget for next year that totals roughly 295 trillion won ($241 billion). It is said that the plan increases the proportion of money funneled to welfare to its highest level ever and boosts the budget for social causes and national defense above and beyond the government’s original proposal.

It seems that the scale of the budget is growing while the government tries to clear up suspicion that money for some areas would be cut or eliminated to help fund the four river restoration project.

Since the economic crisis is not completely over yet, it is understandable that the government intends to continue spending money to help out the country. Moreover, it will be difficult to draft a revised supplementary budget next year because a new law that prohibits the formation of a supplementary budget - which was introduced by the Grand National Party - will go into effect next year. The proposed increase in the money pumped into welfare is more than two times the rate of the overall budget increase, which is in compliance with the idea that the government should pursue “politics for grassroots people.”

After taking a closer look at the proposed budget, however, it becomes clear that several points are hard to support.

First of all, the budget for the four river restoration project has some bad side effects. Shifting the financial burden of 3.2 billion won, out of the 6.7 trillion won needed for next year, to Korea Water Resource Corporation is a desperate measure. It is also uncertain whether the corporation, with total sales of 2 trillion won last year, can bear such a huge investment burden. It essentially equates to a temporary measure that reduces the immediate financial burden on the government. The budget for social overhead capital, which was to be reduced due to financial restraints, has been restored to its original scale, as the government is no doubt taking into account the local elections scheduled for next year. The pressure from politicians and local autonomous organizations, worried that the budget for social overhead capital would be sacrificed at the expense of the river project, was strong enough to sway the government.

Under this plan, it is a certainty that the financial deficit will continue to grow. Minister Yoon said, “The government will manage to maintain sound finances.” However, the total amount of national debt will amount to 366 trillion won, or 35.6 percent of GDP, at the end of the year. Moreover, the National Tax Service predicts that this year’s revenue totals will be lower than last year. In these circumstances, the government must first cut the budget for unessential projects drastically and then craft the budget in a tighter, more restrained manner.

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