South Korea Approves Tight Budget for 2025, Focusing on FiscalSustainability
Seoul, South Korea – The South Korean government has approved abudget of 677 trillion won (approximately $514 billion) for the fiscal year 2025, marking a 3.2% increase from the current year. This decision, announced on August 27th, continues the government’s commitment to a tight fiscal policy for the secondconsecutive year.
The budget increase, while modest, falls short of the government’s projected nominal growth rate of 4.5% for next year. To achieve this fiscal restraint, the government has implemented a significant reduction in spending, cutting 24 trillion won (approximately $18 billion) from the budget. This marks the third consecutive year that the budget cut has exceeded 20 trillion won.
The government’s focus on fiscal sustainability is driven byconcerns over the country’s growing debt burden. The budget for 2025 aims to address the economic challenges posed by the COVID-19 pandemic, which exacerbated the country’s fiscal situation.
The government has cut inefficient and overlapping budget items and replaced them with budgets targeting vulnerable groups, saidDeputy Prime Minister and Minister of Economy and Finance, Choo Sang-gil, during a press conference. This is a measure to restore the fiscal sustainability that has been deteriorating due to the pandemic.
The budget breakdown reveals a total revenue of 651.8 trillion won, representing a 6.5%increase from the current year. The total expenditure, as mentioned, stands at 677.4 trillion won, a 3.2% increase from the current year and a 12.1% increase from 2022 when President Yoon Suk-yeol took office. This represents the lowestbudget increase in the first three years of a government’s term since 2005.
The budget will be submitted to the National Assembly in early September for review by various standing committees and the Budget and Accounts Special Committee. The final budget is expected to be finalized in December.
While the government emphasizes fiscalresponsibility, the budget allocation reflects a focus on key areas:
- Social Welfare: The budget includes increased funding for social welfare programs, particularly for vulnerable groups, reflecting the government’s commitment to social equity.
- Economic Growth: The budget allocates funds for infrastructure projects and research and development initiatives aimed atfostering economic growth and innovation.
- National Security: The budget includes a significant increase in defense spending, reflecting heightened security concerns in the region.
The budget’s emphasis on fiscal sustainability and social welfare programs is expected to be a key focus of debate in the National Assembly. Opposition parties may argue for a moreexpansionary fiscal policy to stimulate economic growth and address the rising cost of living.
The South Korean government’s tight budget for 2025 reflects a cautious approach to managing the country’s finances. While aiming to address the economic challenges of the past few years, the government is also seeking to ensurelong-term fiscal stability and maintain a healthy balance between spending and revenue.
【source】https://cn.yna.co.kr/view/ACK20240827001000881?section=economy/index&input=rss
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