The government plans to spend 376 trillion won ($361 billion) in 2015, up 5.7 percent from this year, as it seeks to revitalize the economy and increase welfare.

The Ministry of Strategy and Finance said Thursday that the 2015 budget was drawn up in line with its expansionary macroeconomic policies.

The proposed budget bill marks the largest on-year spending hike since the global financial crisis in 2008.

“The economic situation remains very harsh, and our economy at present faces a crossroads between making a leap forward or going through a phase of contraction,” Vice Finance Minister Bang Moon-kyun, who is in charge of budget planning, said at a press briefing.

Spending on welfare, health and labor took up the largest portion at a record 115.5 trillion won, or 30.7 percent of the total, followed by 59.2 trillion won on public agencies and 53 trillion won on education.

This would make 2015 first year in which the government has spent more than 30 percent of its budget on general welfare.

While the government expanded its budget for all sectors, it highlighted that spending on public safety would be increased 7.1 percent to 16.9 trillion won next year to prevent accidents like the Sewol ferry tragedy.

Spending on defense and industry were expanded 5.2 percent and 7 percent to 37.6 trillion won and 16.5 trillion won, respectively.

In an effort to further spur growth, it will allocate 24.4 trillion won for infrastructure development and management.

The government earmarked 18.8 trillion won for research and development in basic science and technology, up 5.9 percent, to create new growth.

The Finance Ministry said it expected to secure state revenues of 382.7 trillion won next year, up 3.6 percent from this year.

However, this would be much less than its initial forecast of a 6.2 percent increase.

It is expected to collect taxes worth 221.5 trillion won, including 57.5 trillion won in income taxes, up 2.3 percent.

The expanded budget will further increase Korea’s outstanding debt to about 570 trillion won next year, or 35.7 percent of the country’s gross domestic product.

The government is projected to log a 33.6 trillion-won fiscal deficit next year, or 2.1 percent of GDP, higher than its initial forecast of 1.7 percent.

The government admitted that budget deficit and national debt will worsen, but it will aim to achieve fiscal soundness through reforms.

“Fiscal spending should play a role in turning the economy around,” Vice Finance Minister Bang said.

“The deficit will increase in the short term, but the government will be able to achieve fiscal balance in the long term.”

The proposal will be presented to the National Assembly for approval by Tuesday next week, and needs to be passed by no later than Dec. 2.

By Park Han-na (hnpark@heraldcorp.com)