SEOUL – The South Korean government said on Thursday it would run a fiscal deficit next year to help boost the economy, despite concerns over growing government debts.
The Finance Ministry said it wanted to increase government spending by 4.6 per cent next year to 357.7 trillion won (US$332 billion).
The budget proposal for 2014, endorsed by the Cabinet in a meeting on Thursday, will be submitted to parliament by Wednesday.
The requested increase is lower than a 5.1 per cent rise in the 2013 budget. But it comes as next year's government revenue is expected to fall 0.5 per cent from 2013, its first decline in four years.
The government would consequently run a fiscal deficit of 1.8 per cent of the gross domestic product next year.
The ministry had planned to run a fiscal deficit of 0.3 per cent for the year – but later decided to widen it to 1.8 per cent with an increased budget for economic stimulus.
Overall sovereign debt will grow to 36.5 per cent of GDP next year, up from this year's 36.2 per cent.
Finance Minister Hyun Oh-seok told journalists the ministry had put more emphasis on stimulating the economy rather than reducing fiscal deficits. Under the budget request, welfare spending including health and employment is up 8.7 per cent to 105.9 trillion won.
Defence spending is up 4.2 per cent to 35.8 trillion won, including expenditure to buy satellites, spy drones and missiles used for defence. AFP