The South Korean government Tuesday endorsed 2017 budget at a record scale of 400.7 trillion won ($360 billion), up 3.7 percent from this year and accelerating from a 2.9-percent year-on-year gain in this year’s budget.

When considering the 11 trillion won supplementary budget created for the second half, actual increase in next year’s budget against this year would stop at 1.4 percent or around 4 trillion won.

The fiscal position is to stay reasonably “expansionary” next year within the context of sustaining integrity in public finance, Vice Finance Minister Song Eon-seok said in a press briefing.

“Strictly speaking, we placed more importance on defending fiscal integrity,” Song said.

The proposed spending plan would increase public debt by 38 trillion won to 683 trillion won, sending the debt ratio against the gross domestic product (GDP) above 40 percent next year for the first time. The government, however, claimed the actual national debt ration against GDP would fall under 40 percent as the government earmarked 1.2 trillion won out of the supplementary budget it proposed last month to pay off existing debt.

Underscoring the rising social welfare cost in aging society, welfare budget would rise 5.3 percent on year to reach 130 trillion won. Welfare spending took up 32.4 percent of next year’s budgetary outline. Spending to bolster jobs would increase 10.7 percent to 17.5 trillion won of which 2.7 trillion won is reserved to create jobs for young people, up 15 percent.

Due to escalating nuclear and missile threats from North Korea, defense budget was proposed to gain 4 percent from this year to 40.3 trillion won in 2017. Spending for public infrastructure projects would be cut by 8.2 percent from this year to 21.8 trillion won next year. Diplomatic and unification funds would decrease by 1.5 percent amid stalemate in the inter-Korean relationship. Spending for culture, sports, and tourism would increase 6.9 percent to 7.1 trillion won.

The government estimated public revenue would gain 6 percent next year to reach 414.5 trillion won with tax income adding 8.4 percent to total 241.8 trillion won based on expectations for an economic growth of 3.0 percent next year.

The proposed outline for next year’s budget will be submitted to the National Assembly for review on Friday.

By Cho Si-young

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