People walk along a commercial street in Seoul, S Korea. (AFP)
Seoul: The government of South Korea on Tuesday proposed a budget of 677.4 trillion won ($509.71bn) for next year as it seeks to increase welfare spending for vulnerable people and prop up economic growth while ensuring fiscal health.
The proposed budget for 2025, endorsed by the Cabinet on the day, marks a 3.2% increase on-year following the slowest budget growth in nearly 20 years of 2.8% that the government presented last year for 2024, according to the Ministry of Economy and Finance.
“Our fiscal sustainability was significantly weakened over the course of our responses to the COVID-19 pandemic, and the government is now working to normalize the situation and boost financial stability,” Finance Minister Choi Sang-mok told a press briefing.
“The government is to remove inefficient and overlapped parts and to spend more on welfare programs for vulnerable people and on efforts to revive growth momentum,” Choi added, stressing its continued commitment to budget restructuring.
To secure needed resources, the government slashed non-core expenditures worth 24 trillion won.
It saved 23 trillion won this year through such a restructuring move.
The proposal also called for an 11.8% increase in the budget for research and development (R&D) to allocate 29.7 trillion won, a record amount, for next year.
The country’s managed fiscal balance is forecast to reach a deficit of 77.7 trillion won in 2025, narrowing from the shortfall of 91.6 trillion won this year.
This year’s deficit is equivalent to 3.6% of the gross domestic product (GDP), and it eyes to bring the figure down to 2.9% in 2025.
