Budget to grow 5% to give boost to the economy

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Budget to grow 5% to give boost to the economy

The government and ruling Saenuri Party yesterday agreed to increase next year’s budget by about 5 percent to help revive the economy, according to the Ministry of Strategy and Finance.

Ahead of the ministry’s final announcement slated for later this month, Finance Ministry officials and lawmakers pounded out an agreement to raise the 2015 government budget by 5 percent.

The budget for this year was set at 355.8 trillion won, or $349 billion, so next year’s budget is estimated to be around 374 trillion won. The government will allocate 14.3 trillion won for job creation.

“The government and the Saenuri Party decided to make an all-out effort to stimulate the economy by mobilizing all possible fiscal resources to boost the domestic market and increase exports, too,” said Joo Ho-young, chief policymaker of the ruling party.

Finance Minister Choi Kyung-hwan has pledged the government will make a bigger budget for next year instead of making a supplementary budget this year, even though there were high expectations for an extra budget from financial markets.

“Despite expected significant shortfalls in government tax revenues, the current economic situation doesn’t allow a contracted budget,” Choi said at a meeting with heads of provincial governments last week. “Even risking deficits in the government’s finances, next year’s budget should be expanded.”

“As agreed by both the government and the party, the ministry will boldly turn its austerity policy into expansion,” said Bang Moon-kyu, vice minister for the budget.

The final budget needs to be approved by the cabinet on Sept. 18 and submitted to the National Assembly by Sept. 23.

The Finance Ministry and the ruling party focused on allocating money to projects that will help improve people’s livelihoods, the ministry said.

People over 65 years old will get free flu vaccinations starting next year. Children under 12 will receive free inoculations for hepatitis A.

From December next year, low-income households will be given vouchers for fuel costs that will help them save for three months during the winter. About 960,000 households will be eligible for the newly created voucher plan and will receive a voucher worth about 110,000 won that they can use to pay their fuel bills.

The final amount of the budget for the so-called vulnerable classes will be determined in the final plan.

Another focus of the budget is job creation for young people.

About 553.8 billion won is expected to be allotted for job creation-related projects, including helping teenagers find jobs abroad and continue studying while working.

To increase high-quality, part-time jobs as promised by the Park Geun-hye government as a solution to slow employment growth, the ministry decided to allocate 32.6 billion won next year, up nearly 44 percent from this year’s 22.7 billion won.

For companies that adopt the wage peak system, in which older workers are kept on longer after agreeing to salary cuts, the government will provide more subsidies.

For college students, the government will add about 200 billion won for scholarships and provide 3,000 housing units for rent every year.

The government will also create a 2 trillion won fund for small businesses and merchants and expand the budget for agriculture.

BY SONG SU-HYUN [ssh@joongang.co.kr]

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