Officials to weigh extra budget in 2017

Even though the government has pledged up until recently that the Korean economy can grow around 3 percent next year, it now has changed its tune, saying it could execute a supplementary budget early next year as the economy is expected to remain weak.

The ruling Saenuri Party and the government met on Friday to discuss boosting the sluggish economy by executing most of next year’s budget as early as possible. The ruling party asked the government to even consider plans for additional supplementary budgets next year.

“We have come into an agreement to execute 30 percent of the budget in the first quarter of next year and nearly 60 percent by the first half of next year,” an official at the Saenuri Party said after the meeting at the National Assembly. “The economy faces various problems right now and we believe the ordinary budget isn’t enough to solve such problems. We think a supplementary budget is needed to help Koreans who are having a hard time.”

An official at the Ministry of Strategy and Finance said the government hasn’t decided on a supplementary budget next year or how much they are going to allocate yet but said it will consider it after seeing how the economy performs early next year.

The Finance Ministry said that it will allocate 58 percent of the total budget planned for next year for the first half of the year.

“The 58 percent is the highest portion to be spent during the first half of the year and we have been setting it at the level starting from 2015, as the beginning of the year is expected to be weaker than the second half of the year,” said Kang Joon-mo, a director at the Finance Ministry.

The Bank of Korea has projected the Korean economy to grow 2.5 percent in the first half of next year and 3 percent in the second half. The state-run think tank Korea Development Institute has projected it will grow 2.2 percent in the first half and 2.5 percent in the second half.

Finance Ministry Yoo Il-ho also said the Korean economy is likely to grow slower than the 3 percent that the government has continued to argue it will and that the government might even need to come up with plans to supplementary budgets.

“It appears that we are not going to be able to meet the 3 percent target that we set before due to the various uncertainties from the nation and abroad, along with many downward risks,” Yoo said Thursday. “We will consider whether we need to execute supplementary budgets next year or not after looking the first quarter data next year.”

The government will unveil a new economic outlook for 2017 next week. The government is expected to lower it to the mid-2 percent level.

Meanwhile, Korea’s public sector debt rose 5 percent year on year to 1,003.5 trillion won ($834.7 billion) in 2015. The share of debt in the country’s GDP, on the other hand, fell 0.1 percentage points to 64.4 percent.

BY KIM YOUNG-NAM [kim.youngnam@joongang.co.kr]