Inclusive growth drives budget

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Inclusive growth drives budget

The 2020 budget, which could break 500 trillion won ($440.8 billion), will be focused on further expanding the inclusive economy so that the wealth gap is narrowed and livelihoods are improved. It will also support the development of struggling traditional manufacturing industries.

The Ministry of Economy and Finance’s guidelines on setting next year’s budget was approved at the cabinet meeting hosted by Finance Minister Hong Nam-ki on Tuesday.

In drawing up the budget, four main areas are to be emphasized: revitalizing the economy, improving the wealth balance, innovation and improving safety and peace. The last category includes improving air quality and cooperation with North Korea.

To achieve its many goals, the government will be increasing its commitment to the social safety net, infrastructure and innovative projects.

In terms of the inclusive economy, the Finance Ministry said its goal is to secure the incomes of those in the bottom 20-percent income bracket.

The budget will be used to keep President Moon’s campaign pledge two years ago to provide free education for all high school students while increasing scholarships for students in low-income families.

The government will also be expanding the number of state-run day care centers and related services.

In the new budget, the government will provide funds to help those in between jobs. These are people in the blind spot of unemployment insurance, such as artists. The government said it will guarantee their basic income until they find a job. The budget will provide incentives to young people who land jobs at small and medium-sized enterprises while expanding services helping women and those with disabilities search for jobs.

Particular attention will be paid to air pollution and upgrading outdated infrastructure.

The budget will focus on enhancing the competitiveness of manufacturing industries and export products, including semiconductors, autos and auto parts. It will finance the expansion of smart factories and high-tech industries, including those related to big data, artificial intelligence, the hydrogen economy and 5G.

“We will consider recent difficulties in the economy and the advice from the International Monetary Fund (IMF) in expanding our fiscal spending,” said Ahn Il-whan, head of the Finance Ministry’s budget office.

This year’s budget totalled 470 trillion won. If the government pursues a supplementary budget, the total will hit 480 trillion won. Next year’s budget could break 500 trillion, considering the Finance Ministry said to lawmakers in September that spending will rise average of 7.7 percent annually through 2022.

“We will decide on the size of the budget through adjustments in the mid-term fiscal plan,” said Ahn.

Accordingly to the guideline, each government department will be submitting their budget proposal to the Finance Ministry by the end of May. The Finance Ministry will be submitting the finalized budget proposal by Sept. 3 to the National Assembly.

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