Gov’t rethinks budgets at Saenuri Party’s urging

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Gov’t rethinks budgets at Saenuri Party’s urging

The Saenuri Party has discouraged the government from proceeding with plans to cut budgets for several projects in the social overhead capital (SOC) sector to help finance President Park Geun-hye’s welfare pledges of more than 100 trillion won ($92.4 billion).

At a meeting yesterday to iron out differences between the government and lawmakers on the 2014 government budget plan, Finance Minister Hyun Oh-seok said the ministry will scale back planned cuts in the SOC budget next year.

“The ministry will listen to the Saenuri Party’s request and reduce budget cuts for SOC projects in order to keep the economy recovering.” Hyun said.

The ruling party asked the ministry to maintain an appropriate level of funding for new SOC projects to help boost regional economies and carry out the president’s pledges for infrastructure improvements in the provinces.

“The main points of next year’s budget should be economic recovery and job creation,” the ruling party said in a press release yesterday.

The Ministry of Finance has been planning to slash the SOC and some other budgets to find money for the president’s welfare initiatives.

“For the first time, the welfare budget will exceed 100 trillion won, taking the largest share of the total budget,” Hyun said. “The government will expand investment in welfare, education and culture next year, while making careful investment in the SOC and industrial sectors.”

Specifically, ruling party lawmakers and the finance minister agreed to keep the agriculture industry budget at the current 18.3 trillion won, while expanding direct financial support for individual farmers by lowering interest rates.

They also agreed to double welfare spending on artists from the current 10 billion won to 20 billion won and increase funding for arts and cultural projects from 122.3 billion won to 187 billion won.

The government’s plan is based on its belief that the economy is slowly improving since the second quarter of this year.

However, since the general public remains pessimistic about the economy, slashing the SOC budget - widely considered crucial for recovery - has become a controversial issue even before the ministry officially announces the plan.

The SOC budget for this year was set at 23.9 trillion won, up 3.6 percent from last year. The total budget for this year was 342.5 trillion won, up 5.3 percent from the previous year.

But next year, government expenditure is expected to be slashed due to a snowballing deficit stemming from falling tax revenue.

A final budget plan will be announced by the end of this month.

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