South Korea's chief economic policymaker said Thursday that the government will sharply raise next year's budget spending to strengthen its fiscal role in supporting growth and tackling a spate of chronic problems, such as widening income inequality.
At a public finance forum, Finance Minister Kim Dong-yeon said given sound tax revenue and need to support innovative growth, the country needs to play a greater fiscal role.
The minister said earlier the government plans to increase spending to create more jobs and expand the social safety net in the face of rising uncertainties, including the growing trade war between major economies and a slowdown in facility investment.
He noted that next year's budget spending increase is far higher than the earlier planned 5.7 percent gain.
"The government will also raise its budget spending growth in the period up to 2022," he said, stressing that additional spending is necessary to address poor employment situations and widening income inequality, and to boost innovative growth.
The government already frontloaded 62.1 percent of this year's budget in the first half, exceeding its initial spending target to prop up a sluggish economy.
Budget spending by the government and public institutions for the January-June period stood at 174.1 trillion won (US$155.9 billion), compared with an earlier goal of 162.6 trillion won, according to the Ministry of Strategy and Finance.
The first-half spending made up a significant part of the 280.2 trillion won that the government has set aside for early fiscal execution out of the country's 428 trillion-won budget for 2018.
The planned increase in budget spending also came as the ministry cut its growth estimate to 2.9 percent this year from its earlier projected 3 percent and sharply slashed its job creation target to 180,000 from an earlier 320,000.
Last year, the economy expanded 3.1 percent. The ministry's latest growth revision is on par with the Bank of Korea's growth forecast. The central bank also trimmed its growth estimate to 2.9 percent from its earlier 3 percent projection.
The minister also stressed that the government will adjust its fiscal spending to attain the sustainability of the country's sound fiscal position. (yonhap)