South Korea will seek to slash a tenth of all state-funded projects in 2016 to cut back on unnecessary spending and divert more resources to meet growing welfare outlays, the finance ministry said Tuesday.
The 2016 budget guidelines, which passed the Cabinet, call for a stringent "zero-base" review of all 2,000 state-subsidized projects receiving taxpayer money.
Each government ministry and agency will be required to examine their projects and halt support for 10 percent of them starting next year. The government will aim to eliminate projects that have failed to generate results or are redundant, and programs that customarily got assistance in the past.
The finance ministry said it spends some 58 trillion won ($53.5 billion) annually to support the numerous projects, although about 25 trillion won goes to programs that are fixed by law, and cannot be easily changed.
In addition to subsidy cuts, the government will adopt a "one-out, one-in" system in which ministries and agencies can fund new projects only if one existing program is terminated, the ministry said, without disclosing how much money can be saved.
"The goal of the new guidelines is to prioritize spending amid tax revenue shortfalls and greater demand for welfare and other key programs that can bolster economic competitiveness," said Song Eom-seok, head of the ministry's budget office.
Song said that welfare and projects that can help stabilize the livelihoods of ordinary people will get more funding, while more money will be allocated to the creation of a national eco-system that can fuel growth, generate new economic opportunities and help start-ups and business ventures.
The official added that the government will earmark more money for programs aimed at helping young people get practical training while they are at school, in an effort to raise their chances of finding work after graduation.
Spending on public safety will also be increased, along with programs to better cope with a rapidly aging society.
The finance ministry also said that funds will be allocated to reflect President Park Geun-hye's Dresden Declaration, which calls for laying the groundwork for a future reunification of the two Koreas. The initiative emphasizes more exchanges and cooperation between the two sides that are still technically in a state of war.
Projects like building rail lines along the southern side of the 240-kilometer-long demilitarized zone that separates the two Koreas can be pursued, even if bilateral relations remain cool. The lines could then be linked with North Korea's railway line in due course.
Last year, the government allocated 200.3 billion won to expand cooperation with Pyongyang, with 360 billion won being set aside this year.
Other ways to maximize the effect of budget spending is to get firms to engage in public-private partnerships that will permit them to play a greater role in infrastructure building, according to the finance ministry.
The latest guidelines will be sent to government ministries and agencies by Friday, with each responsible for submitting their 2016 budget spending plans by June 5. The government will then examine all plans and submit its 2016 budget proposal to the National Assembly on Sept. 11. (Yonhap)
