South Korea Approves Tight Budget for 2025, Focusing on FiscalSustainability
Seoul, August 27, 2024– The South Korean government has approved a budget of 677 trillion won (approximately $510 billion) for 2025, markinga 3.2% increase from this year. This decision, announced at a cabinet meeting on Tuesday, reflects the government’s commitment to maintaining a tightfiscal policy for the second consecutive year.
The budget increase 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 spending cuts totaling 240 billion won, marking the third consecutive year that budget cuts have exceeded 200 billion won.
The 2025 budget allocates 651.8 trillion won to total revenue, representing a 6.5% increase from this year. While total spending is set to increase by 3.2% compared to 2024, it represents a significant slowdown from the 12.1% increase observed since the inauguration of President Yoon Suk-yeol in 2022. This marks thelowest three-year budget increase since 2005.
The government has trimmed inefficient and overlapping budget items, replacing them with allocations targeted at vulnerable groups, explained Deputy Prime Minister and Minister of Economy and Finance, Choi Sang-mok, at a press conference. This is a crucial step in restoring fiscalsustainability, which has been negatively impacted by the pandemic.
The budget emphasizes fiscal prudence amidst ongoing economic challenges, including rising inflation and global economic uncertainty. The government aims to prioritize spending on social welfare programs, infrastructure development, and research and development while maintaining a balanced approach to fiscal management.
The 2025budget will be submitted to the National Assembly in early September for review by various committees, including the Standing Committees and the Budget and Accounts Special Committee. The final budget is expected to be approved by December.
Key Highlights of the 2025 Budget:
- Total Budget: 677 trillionwon (approximately $510 billion)
- Total Revenue: 651.8 trillion won
- Total Spending: 677.4 trillion won
- Budget Increase: 3.2% compared to 2024
- Spending Cuts: 240 billion won
- Focus: Fiscal sustainability, social welfare, infrastructure development, and R&D
Impact and Analysis:
The South Korean government’s decision to maintain a tight budget for 2025 reflects a cautious approach to fiscal management amidst a challenging economic environment. While the budget prioritizesessential spending areas, it also signals a commitment to fiscal discipline and long-term sustainability.
The focus on social welfare programs highlights the government’s commitment to addressing income inequality and supporting vulnerable populations. Investments in infrastructure and R&D are expected to contribute to economic growth and competitiveness.
However, critics argue that thebudget cuts could hinder economic recovery and limit government’s ability to address pressing issues such as climate change and social inequality. They also express concerns about the potential impact of these cuts on public services and infrastructure development.
The 2025 budget will be closely scrutinized by the National Assembly and the public. Thefinal budget allocation will determine the government’s priorities and its ability to navigate the complex economic challenges facing South Korea.
【source】https://cn.yna.co.kr/view/ACK20240827001000881?section=news&input=rss
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