Warming up for next year‘s budget planning, South Korean President Moon Jae-in on Thursday indicated a further increase in government expenditure as part of its long-term plan to address the nation’s structural problems such as low birth, elderly poverty and unemployment.
He also added pressure on the economic team -- led by Deputy Prime Minister and Finance Minister Kim Dong-yeon -- to speed up with the government‘s innovative growth initiative.
“Key macroeconomic indicators show that our economy remains in an upturn, boosted by strong finances,” the president said in his keynote speech at the yearly state fiscal strategy meeting held in Cheong Wa Dae.
President Moon Jae-in (center) on Thursday chairs the yearly state fiscal strategy meeting to discuss government spending total for next year‘s budget. (Yonhap)
Moon pointed out, however, that the outcome of the government’s economic policies have not been evenly distributed to the people.
“Our society is faced with structural difficulties such as slow growth, unemployment, low birth, and elderly society,” Moon said.
“In order to overcome these challenges, it is crucial that the government plays an active role, which in turn requires an active fiscal strategy.”
The high-profile fiscal meeting, first established by former President Roh Moo-hyun, is held every year prior to the budget compilation process. The event was attended by members of the Cabinet, as well as key figures of the ruling Democratic Party of Korea and parliamentary committees.
One of the key agendas this year was the idea of increasing government spending to support Moon‘s welfare programs, a notion which has been triggering backlash from the conservative opposition camp.
“Last year, (the government) placed focus on the new government’s fiscal paradigm and state policy initiatives,” said an official of the Ministry of Strategy and Finance.
“This year, as we are going through the second year of the Moon administration, we will exert more efforts in drawing out specific action plans and the fiscal strategies required to back them.”
In a fiscal operation report submitted to the National Assembly last year, the ministry suggested that the government spending is to climb on a yearly average of 5.8 percent until 2021. The suggested figure for next year was 5.7 percent, according to which the total spending would have been 453 trillion won ($420 billion).
In March this year, the ministry announced in a renewed fiscal guidance that it will expand the total amount of spending, triggering the possibility that the government spending total may near the 500 trillion won mark.
But despite the consensus on the need of fiscal expansion, the president also expressed concerns over the sluggish progress in key economic initiatives.
“There is criticism that our government has failed to come up with a tangible outcome when it comes to innovative growth,” Moon said, pressing the top economic policymaker Kim to add momentum to the related blueprints.
The president also called for supplementary actions concerning the negative consequences of the much disputed legal minimum wage hike.
“If the wage hike results in lower employment or a decline in income, that could mean a side effect (of the hike) so the government needs to look for backup measures,” Moon said.
By Bae Hyun-jung (email@example.com