SKorea announces extra US$20.9bln budget fund

Monday, March 23, 2009 at 9:14 PM Posted by Beijing News


South Korea Tuesday announced a 28.9 trillion won 20.9 billion dollar extra budget aimed at pulling the country back from the brink of its first recession for 11 years.

The Strategy and Finance Ministry said the budget will save and create jobs, support small businesses, invest in new growth engines and help the poor and the jobless.

The ministry said in a statement the budget, to be submitted to parliament this month, "puts priority on overcoming the economic crisis early."

South Korea's export-driven economy has been hard hit by the global slump as its overseas markets shrink. It declined 5.6 percent quarter-on-quarter in October-December, the steepest fall since the East Asian financial crisis of 1998.

Finance Minister Yoon Jeung-Hyun has said the economy will likely contract two percent this year and lose 200,000 jobs, while many private researchers expect a far steeper downturn.

The extra spending is equivalent to about two percent of gross domestic product. It is expected to boost growth by 1.5 percentage points, or two percent if backed up by more private investment and deregulation, the ruling Grand National Party GNP said in a statement Monday.

Some 3.5 trillion won will be used to save and create jobs, including job-sharing schemes, the ministry said. The aim is to create 552,000 jobs in addition to those saved.

The number of people employed fell in February by 142,000 year-on-year, the largest reduction since September 2003.

Some 4.9 trillion won will go to support small and medium-size firms as well as other small businesses such as restaurants and shops.

The budget sets aside 2.6 trillion won to reinvigorate the regional economy. Some 2.5 trillion will be invested in improving advanced education and in new growth engines -- such as the government's "green new deal" spending on environmentally friendly technology and projects.

The sum of 4.2 trillion won has been set aside to help low-income and jobless people.

The new spending totals 17.7 trillion won and the remaining 11.2 trillion won will largely be used to compensate for previously announced tax cuts.

The extra budget, if approved, will represent about 10 percent of the original 2009 budget of some 284.5 trillion won. It will be funded mostly by the issuance of state bonds.

The finance ministry said it could help the country increase its current account surplus to 13 billion dollars this year.

The main opposition Democratic Party DP called last week for an extra budget of just 13.8 trillion won, setting the stage for more confrontation in parliament following violent clashes earlier in the year.

The conservative GNP has 172 seats in the 299-seat single-chamber parliament, more than double the DP's 83.

But the smaller party can try to physically block passage of legislation, by occupying the podium used by committee chairmen.

"The national debt will snowball because of the President Lee Myung-Bak government's indiscreet tax cuts for the wealthy and irrational fiscal spending," Democratic Party chairman Chung Sye-Kyun said last week.





Malaysia" festival in Kuala Lumpur. REUTERS/Zainal Abd Halim

0 comments:

Post a Comment

Subscribe to: Post Comments (Atom)