Budget funding diverted to jobsThe Park Geun-hye administration will cut 10 percent of its spending on major projects and funnel that money into creating more jobs, particularly for women and the young.
A 10 percent reduction in project spending is the biggest cut since 2011 under the Lee Myung-bak administration, according to the Ministry of Strategy and Finance.
In a Cabinet meeting Tuesday, the government agreed to reduce non-mandatory spending to create more jobs. The government is also trying to keep the national debt-to-GDP ratio at 40 percent. This year, it expects the ratio to be 40.1 percent, but it could fall as the government has been able to collect 2.1 trillion won ($1.8 billion) more in revenue than expected.
“The idea is to raise the efficiency of budget spending instead of reducing the overall budget,” said Park Chun-sup, head of the budget department at the Ministry of Strategy and Finance. “We plan to readjust the expenses so that the budget can be reallocated to projects with higher efficiency.”
Non-mandatory spending currently accounts for 53 percent of the 386 trillion won budget set for this year, or 203 trillion won. This does not include such welfare spending as allowances for low-income households, public pensions and health insurance. After excluding fundamental costs such as civil servant paychecks, which amount to 30 trillion won, the government has room to cut 10 percent of 170 trillion won.
This means the government will be able to relocate roughly 17 trillion won to projects that lead to more jobs.
To improve efficiency, 196 projects with a total budget of roughly 15.8 trillion won will be reviewed, particularly those with budgets over 10 billion won, including infrastructure development. Some of the projects will undergo big readjustments that could include merging overlapping projects or canceling them.
Additionally, new projects will be more closely scrutinized before getting government approval. Three years after projects are implemented, they will be evaluated to determine if they should continue or be halted.
All government departments will be submitting budget plans to the Finance Ministry by the end of May, and the ministry will submit a budget proposal to the National Assembly by Sept. 2.
BY LEE HO-JEONG [firstname.lastname@example.org]
More in Economy
No more delays in shorter workweek, says labor minister
Better to give property than to receive a big tax bill
Border restrictions drastically cut North Korea's trade
Central bank holds rates steady, adjusts up GDP forecast