South Korea's state budget may top 510 trillion won ($421 billion) next year, up some 9 percent from this year's budget, as the country seeks to boost the economy with massive fiscal spending, government officials said Sunday.
For the year, the country's budget is set at some 470 trillion won, and the government wants to increase the state coffers by between over 7.3 percent and 9.5 percent.
For the year, the annual budget spending increase was set at 9.7 percent.
In June, government ministries and other state agencies requested a 6.2 percent hike, or 29 trillion-won rise, in their budgets to 498.7 trillion won for next year as they want to spend more on welfare, research and development, and defense, the finance ministry said Friday.
A large chunk of the proposed budget is set to be spent on health and welfare, as well as defense and research and development.
The government wants to spend more next year as Asia's fourth-largest economy is tipped to suffer a prolonged slump amid the trade row between the United States and China, which are also the two largest importers of South Korean goods.
Last month, Japan also implemented export curbs against South Korea, casting a further pall on the economy.
In the second quarter of the year, the economy expanded 1.1 percent on-quarter following an unexpected contraction of 0.4 percent in the first, on the back of increased budget spending.
The Bank of Korea cut its policy rate by a quarter percentage point to 1.5 percent last month, citing worsening external conditions, and slashed its growth outlook to 2.2 percent from the previous 2.5 percent.
The central bank is widely expected to deliver another rate cut this year, but the impact of any monetary easing on the economy may be limited as the current economic slump mainly comes from outside South Korea.
The government wants to spend more next year to help the economy chug along in the face of increased uncertainties with a greater fiscal role.
During earlier budget planning that spans over to 2022, the government estimated an average 7.3 percent gain in annual budget spending.
The finance ministry said it will finalize the government's budget proposal and submit it the National Assembly by early next month for approval. (Yonhap)