August 30, 2019 10:29
The government has set next year’s fiscal budget at W513.5 trillion and plans to issue bonds to pay for it in time for the general election (US$1=W1,214).
That marks an increase of 9.3 percent from this year, the second year in a row that the budget has risen by over nine percent.
A Cabinet meeting on Thursday finalized the budget, which will now be sent to the National Assembly for approval. If it passes, government spending will total W113 trillion since President Moon Jae-in took office in 2017.
Finance Minister Hong Nam-ki said, “We took the most expansionary stance possible within manageable limits to reflect the government’s determination to deliver an economic recovery.”
The government wants to use taxpayers’ money to contain a crisis spreading through the entire economy caused by slowed growth, increasing unemployment and declining exports.
Around half of the budget will be spent on health, welfare and labor policies, but spending on research and development will also increase in double digits.
Over the last two year, the national debt did not increase significantly thanks to a hefty rise in tax revenues. But the amount of taxes collected is expected to fall next year for the first time in a decade due to lackluster business performance and falling incomes.
That is why the government hopes to make up for the shortfall by issuing W60.2 trillion worth of bonds, increasing the fiscal debt to over W800 trillion.
If the trend continues for the rest of Moon’s term, the debt could snowball to over W1,000 trillion in 2023.
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