Choi vows action to rev economyHinting that the economy is struggling, Minister of Strategy and Finance Choi Kyung-hwan pledged to maintain an expansionary fiscal policy.
The recent global stock market turmoil has raise questions over China’s economic fundamentals and whether it can hit 7 percent annual growth this year. China is Korea’s biggest export market.
At a meeting between ruling Saenuri Party lawmakers and government officials on Thursday, Choi said, “I am planning an expansionary policy for next year’s budget within a range that would not damage our fiscal soundness, so as to accelerate our momentum for economic rebound stimulated by the supplementary budget.
“The focus for next year’s budget will be on giving hope to young people and helping our economy take a leap, as well as providing livelihoods for the people,” Choi said.
More investment on national defense will be also included, Choi said, to “strengthen anti-submarine forces and combat power at the DMZ.” His stress on the defense budget followed a high level of tension between South and North Korea that was ultimately lowered by three-day inter-Korean talks.
The ruling party demanded a budget increase to stimulate the economy, create jobs for youth and boost household income, said Kim Sung-tae, a leader of the party, at a briefing after the closed-door meeting.
Kim complained, however, that Finance Ministry officials were “too conservative” in budget planning in order to maintain the current 40 percent ratio of government debt to gross domestic product. He urged more social overhead capital (SOC) projects, such as state-run businesses building bridges, harbors and other infrastructure.
“The government is too conservative in SOC projects,” Kim said. “The government is trying to include 15 trillion won [$12.7 billion] of supplementary budget that was previously allocated into next year’s budget as well.
In that sense, the effective increase in the 2016 budget appears to be reduced.”
“To prevent a repeated fiscal deficit, the government will hold a conservative outlook for economic growth and tax revenues [for next year],” Choi said.
Asia’s fourth-largest economy recorded the slowest growth in six years in the second quarter, 0.3 percent on a quarterly basis.
Government data showed recently that Korea’s fiscal deficit hit a new high in June, snowballing to 43.6 trillion won due to early spending on stimulus measures.
The ruling party’s push for the government to adopt “a forward-looking attitude” comes as politicians are preparing for next year’s general election, and many desire budget increases for their constituencies.
Kim Moo-sung, the Saenuri Party’s chairman, told reporters Thursday on a different occasion that “the outlook for our economy is really bad, and the domestic market is struggling. Until the entire cycle is improved, we can’t help but continue an expansionary policy.”
Choi, a former floor leader and three-term lawmaker of the ruling party, was criticized for a remark about “help” for the ruling party to win elections through budget planning.
According to the opposition New Politics Alliance for Democracy, Choi allegedly said at a dinner with Saenuri Party lawmakers on Tuesday that he would assist the party in the elections by “achieving 3 percent economic growth” and “economic policymaking” based on a schedule of the party’s campaigns.
“Speculation is high that Choi will run in the elections,” a Finance Ministry official told the Korea JoongAng Daily. “Since the official deadline for candidacy registration is April 13, he will go back to the party by resigning the ministership three months before the deadline under the law.”
BY KIM HEE-JIN [firstname.lastname@example.org]