Budget to drop for first time in 13 years despite flood measures

Economy

Published: 14 Aug. 2022, 17:15 Updated: 14 Aug. 2022, 18:33

Budget to drop for first time in 13 years despite flood measures

The Jamsu Bridge, connecting Yongsan District in central Seoul and Seocho District in southern Seoul, is submerged on Aug. 9 after heavy rain. The government budget for next year is expected to be lower than this year's, but more will be allocated to install and maintain drainage facilities to prevent similar damage in the future. [YONHAP]

Korea may cut its government budget for the first time in 13 years even as it spends heavily on flood mitigation infrastructure following record rains and despite expensive campaign pledges made by the president.

According to the Ministry of Economy and Finance on Sunday, the ministry submitted a rough plan for next year's budget to President Yoon Suk-yeol last week.

"Next year's budget will be significantly lower than that of this year, including supplementary budgets," Finance Minister Choo Kyung-ho told reporters on Saturday while visiting a Napa cabbage farm in Gangneung, Gangwon.

Yoon announced at a meeting in July that he aims to lower the fiscal deficit to less than 3 percent of gross domestic product (GDP) from 2023. Another goal is to keep the debt-to-GDP ratio around mid-50 percent levels through 2027.

The debt-to-GDP ratio is expected to be 49.7 percent by end of this year, while the fiscal deficit will come in at around 5.1 percent.

If the allocations go as planned, the budget for 2023 will come in below 2022's 679.5 trillion won. This year's budget was initially set for 607.7 trillion won, but was increased after supplementary budgets were added to support small businesses suffering as a result of the pandemic.

It would be the first time in 13 years that the annual government budget drops from the previous year. The amount of the decrease was not specified.

Yoon's transition committee said in May that it will cost around 209 trillion won over the next five years to carry out the president's many campaign pledges, while more money will be allocated to maintaining drainage and water facilities after the Seoul metropolitan area and Gangwon were hit hard by the heavy rains.

The president will be reviewing budgets for key projects next week.

The People Power Party (PPP) held a meeting on Aug. 10 and decided to build various underground tunnels and facilities that can store rainwater during downpours. The lawmakers announced at the meeting that more money will be allocated to prevent floods and improve drainage systems.

"A drainage pump in Yangcheon District, [western Seoul] was built during Seoul Mayor Oh Se-hoon's term, and the district suffered less damage during the recent rain," said Park Hyeung-soo, a PPP lawmaker after the meeting. "We decided at the meeting that we need to install more drainage pumps and facilities in more neighborhoods."

Attending lawmakers urged the government to increase next year's budget related to fixing and installing more drainage infrastructure. Funding long term projects such as developing a system that can forecast flooding was also suggested.

BY SOHN HAE-YONG, LEE TAE-HEE [lee.taehee2@joongang.co.kr]