The South Korean government is set to keep up record budget streak next year for the fifth straight year and also the final year of President Moon Jae-in’s five-year term.
Under the draft of 2022 budget scheme of the Ministry of Finance and Economy, spending outline by government offices came to 593.2 trillion won ($530.6 billion), up 6.3 percent from this year’s original budget of 558 trillion won.
Since Moon took office in May 2017, the fiscal budget has gained more than 6 percent annually, doubled from the average of 3 percent in the previous years.
The original budget scheme (excluding supplementary budgets) expanded 6 percent in 2018 from the previous year and then 6.8 percent in 2019, 6.2 percent in 2020, and 6 percent in 2021.
The actual budget could turn out fatter after review by the legislative as rivaling parties would opt stimuli to woo votes ahead of the presidential election in March next year.
Health, welfare and employment as in the previous years would take up the bulk with 9.6 percent increased from this year’s spending of 119.7 trillion won that made up nearly 40 percent of total fiscal budget.
[Photo by Park Hyung-ki]
The biggest rise would likely be in environment sector in line with the government’s green initiative to meet 2050 carbon neutrality. Proposed spending rose 17.1 percent to 12.4 trillion won to build electric and hydrogen vehicle infrastructures and wean out of fossil fuel.
Defense-related spending was also up 5 percent as related ministries sought to boost research and development on satellite communication and aircraft controllers to enhance defense capacity and also improve morale of soldiers by raising meal unit price and salary.
The finance ministry plans to submit a 2022 budget proposal to the National Assembly by September 3.
The government and ruling party have gained more leeway to stretch the fiscal budget to another record level despite concerns for snowballing debt and deficit due to greater-than-expected tax revenue this year. The government expects tax revenue to exceed 300 trillion won, 17 trillion won more than its estimate.
In the first quarter ended March, Korea’s tax revenue increased 19 trillion won from a year ago on hot asset market.
By Chun Gyung-woon, Yang Yeon-ho, and Lee Eun-joo
[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]