S.Korea seeks 5.5 % hike in budget for 2012

The South Korean government wants to increase its spending by 5.5 percent for 2012, aimed at boosting job creation and strengthening the nation's overall growth potential, the finance ministry said Tuesday. According to the budget proposal to be presented to parliament on Friday for approval, the government seeks to spend a total of 326.1 trillion won (US$272.7 billion) for next year, up from 309.1 trillion won set aside for 2011. The government has mainly focused on job creation in the budget plan as it believes that it could lead to better welfare and stronger economic growth at a time when the economy faces mounting external uncertainties. "It is inevitable to place the top policy priority on job creation in order to minimize the impact of the global fiscal crisis on the real economy," Finance Minister Bahk Jae-wan told reporters. "We drew up next year's spending plan as a jobs budget." To that end, the government will offer 9.5 trillion won to create 562,000 jobs for younger people, senior citizens and others vulnerable to an economic slowdown. It is up from this year's 9 trillion won allocated for the same purpose, the ministry said. The government will also launch a 200 billion won fund intended to help young entrepreneurs start their own businesses, while it will spend more on encouraging people to get jobs and provide job training for those in their 40s and 50s. "The 2012 budget puts priority on creating jobs and supporting those who want to work but face difficult situations by providing customized welfare services," the ministry said in a press release. For health, welfare and labor affairs, the government assigned 92 trillion won, up 6.4 percent from this year's budget. It also plans to spend 45.1 trillion in education, up 9.3 percent from this year. Spending on national defense will increase 5.6 percent to 33.2 trillion won, while the government earmarked 3.9 trillion won for foreign relations and reunification, up 8.1 percent from this year, according to the ministry. To strengthen the nation's growth potential, the spending plan calls for 16 trillion won to be used on research and development, 7.3 percent more than the money set aside for the purpose this year. Expenditure on social infrastructure will shrink 7.3 percent to 22.6 trillion won, but when the spending on the near-completed project to refurbish the nation's four major rivers is excluded, the amount will expand 4.5 percent, or 1.2 trillion won. The increase is aimed at boosting domestic demand, helping regional economies and eventually strengthening the overall economic vitality of the nation. Meanwhile, the 2012 budget plan is based on the premise that the nation's economy will expand 4.5 percent next year. This is lower than the government's earlier 4.8 percent growth projection. The ministry predicted that it will bring in 344.1 trillion won in revenue next year, up 9.5 percent from this year. Tax revenue is expected to gain 9.7 percent to 205.9 trillion won, while non-tax revenue and income from fund operations will come to 28.6 trillion won and 109.6 trillion won, up 16.7 percent and 7.2 percent from this year. The ministry said that it kept its budget spending growth rate 4 percentage points lower than expenditure expansion next year in a bid to improve the overall fiscal status amid growing emphasis on fiscal health in running a stable economy. Under its 2011-15 mid-term fiscal management plan unveiled along with the budget proposal for next year, the ministry said that it aims to balance the budget in 2013, one year faster than its earlier target. "Moving up the schedule for a balanced budget by one year is to show our will to hand over the state coffers in better shape," Finance Minister Bahk said. "We need to actively remove spending on non-essential and non-urgent projects and slim down."