Record budget set, battle beginsWith the conclusion of the annual government audit, lawmakers are set to begin reviewing the government’s proposal for a record 513.5 trillion ($438.5 billion) won budget next year.
The proposal, crafted to reflect the government’s drive for expansionary spending, faces a rocky road to approval from a fractured National Assembly amid concerns that it could take the country’s debt to risky levels.
The proposal is a 9.3 percent rise from this year’s budget and is expected to increase the country’s debt-to-GDP ratio to 40.5 percent from 38.0 percent this year, according to the National Assembly Budget Office.
While Korea’s debt-to-GDP ratio remains at healthy levels compared to the Organisation for Economic Cooperation and Development average above 100 percent, concern is growing that the expansionary policy direction could lead to snowballing debt.
Opposition lawmakers have voiced alarm over the rapid increase of government debt, which is expected to rise to 1,490.6 trillion won in 2028, more than double this year’s 734.8 trillion won. Korea’s debt-to-GDP ratio will rise to 56.7 percent by that year.
The government remains committed to its expansionary fiscal policy, considering that the economy this year is expected to grow at the slowest pace since 2009 in the aftermath of the global financial crisis.
During an emergency ministry meeting on Tuesday, Finance Minister Hong Nam-ki vowed to gain approval for the budget while maintaining much of the original proposal.
Hong also ordered officials to pre-emptively prepare for spending next year in order to ensure that the funds could be spent right away.
President Moon Jae-in has repeatedly voiced support for the government’s plans, expressing that the expansionary budget is “not a choice but a necessity” during this year’s annual address to the National Assembly on Tuesday.
The National Assembly faces a Jan. 1 deadline to pass the proposal.
If it fails to approve the budget by that date, a provisional budget could be set for next year based on this year’s budget, effectively nullifying the expansionary policy direction.
Spending for next year focuses on health care, welfare and labor, with 181.6 trillion won proposed for the category, up 12.8 percent from this year.
Opposition lawmakers have disapproved in particular of the government’s spending on employment, especially on elderly job programs.
The government will create a total of 740,000 jobs for the elderly next year, an increase of 130,000 jobs from this year, spending a total of 1.2 trillion won, up nearly 50 percent from this year.
“The government is injecting funds to create elderly jobs and masking the realities of the employment [situation],” said Liberty Korea Party lawmaker Lee Jang-woo during an audit for the Ministry of Employment and Labor on Monday.
Considering that this is the last budget review for the current crop of lawmakers before general elections next year, resistance is expected to be fierce.
BY CHAE YUN-HWAN [firstname.lastname@example.org]