Budget plan stresses infrastructure

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Budget plan stresses infrastructure

The administration will have its proposed budget for next year in final form and ready to send to the Assembly soon; yesterday, the Ministry of Strategy and Finance released a preview of its policy direction, which emphasizes job creation and boosting economic growth outside of the Seoul metropolitan area.

At its weekly economic policy adjustment meeting, held yesterday at the government complex in Gwacheon, Gyeonggi, the ministry confirmed that it would allot 22.6 trillion won ($19.7 billion) next year for the social overhead capital (SOC) budget, which includes projects such as roads and bridges. Though the amount is less than this year’s 24.4-trillion-won SOC budget, the ministry said that when the spending on the four rivers restoration project and on the 2012 Yeosu Expo is excluded, the amount would be a 1.2-trillion-won increase. (Both projects will be completed in less than a year; 2012 spending will be greatly reduced from 2011 levels.)

That increased spending, which will be spread around both the Seoul area and the provinces, is in part a bow to practical politics. Legislative and presidential elections are on tap next year and the administration wants to demonstrate its concern for improving the infrastructure that affects voters’ daily lives.

The Finance Ministry, of course, insisted that its motives were pure. Kim Dong-yeon, a senior ministry budget official, stressed that the budget plan is meant to create jobs and boost the provincial economy.

The ministry said many of those jobs would be created to renovate and add to the nation’s infrastructure and to help small- and mid-size firms. The budget contains funds for expanding investments in promising industries, in environmental projects and “green” industries and in the service sector. There will be additional spending, for example, on emerging research and development projects such as a science belt in Daedeok, Gyeonggi and stem-cell research. Outlays will also target the country’s electric vehicle industry.

The ministry’s target budget for 2012 is in the range of 324 trillion won to 327 trillion won, an increase of 4.8 to 5.8 percent from this year’s spending. That increase, however, would be smaller than the 7.6-percent increase in funds requested by ministries and other agencies in June. The ministry’s budgeters have emphasized their intention to keep outlays nearly in line with expected revenues.

“Our budget proposal is focused not just on job creation and welfare, but also on the fiscal side to prepare for future economic vitality,” Kim said.

Last month, President Lee Myung-bak said in a Liberation Day speech that the country should have a balanced budget by 2013, one year earlier than his earlier target for balancing the books. As part of measures to reach that goal, the Finance Ministry said it would limit annual expenditure growth to between 4 and 5 percent and would try to increase revenues by 7 percent in the period 2011 to 2015.

By Lee Eun-joo [angie@joongang.co.kr]

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