South Korea on Tuesday highlighted the importance of its budget spending in supporting the country's economic growth next year, signaling a budget hike amid the growing fallout from the spread of the new coronavirus.
Under its 2021 budget guidelines, the government said it will continue to maintain the active role of fiscal spending in boosting growth, while seeking to enhance its fiscal soundness.
The guidelines, reviewed and approved by the Cabinet on Tuesday, are designed to direct government ministries and agencies as they write their budget requests, which must be submitted to the Ministry of Economy and Finance by May 29.
The finance ministry will draw up a budget bill for the entire government and submit it to the National Assembly before Sept. 3.
"The very foundation of the country's economy may have been damaged by COVID-19, while support for self-employed people and small businesses is more urgently needed than ever before," Ahn Il-hwan, head of the budget planning office at the finance ministry, told reporters.
"An active role for fiscal spending will be inevitable for the revitalization of the economy," he added.
Such an emphasis on the part of government spending may signal another increase in overall government expenditure, which jumped by more than 9 percent both this year and last.
South Korea's annual budget is at 512.3 trillion won ($408 billion) this year, up 9.1 percent from 2019.
An increase of more than 9 percent from this year will put overall government expenditure at more than 520 trillion won for the first time in the country's history.
"Fiscal spending is the last defense for the country's economy," Ahn said.
"The government will realize both the active role of government spending and its fiscal soundness by pushing for intensive expenditure restructuring," added the official.
A large share of 2021 spending will be focused on spurring local consumption and revitalizing the economy as it faces an extended slump caused by the virus outbreak.
To this end, the government seeks to boost its support for small and medium-sized businesses to enhance their global competitiveness while enhancing their preparedness for future changes in the global value chain.
It will expand its investment to develop future growth engines, and work to develop new global businesses.
The budget guidelines also call for increased support for social safety nets and enhanced social and medical systems to counter disasters, including contagious diseases.
To improve the efficiency of its spending, the government is seeking to mandatorily cut the discretionary spending of all government offices by 10 percent, it said. (Yonhap)