The Ministry of Strategy and Finance said Sunday that it will reevaluate all of its existing fiscal spending plans from scratch to come up with the necessary funds needed to meet President-elect Park Geun-hye's campaign pledges, sources from the presidential transition team said Sunday.
Park, who takes office as the country's first woman chief executive on Feb. 25, has said she will need 134.5 trillion won
(US$127.3 billion) over the next five years to follow through on the various promises made to voters. Of the total, the finance ministry needs to come up with 81.5 trillion won. The ministry that controls the country's economic policies injected money into 608 projects as of last year.
Rep. Yoo Sung-kull, the chief member for the transition team's economic panel, and former vice finance minister, told ministry officials that there is a need to come up with plans to alleviate the plight of ordinary people, revive the sluggish economy and rebuild the middle class that has been hit hard by the recent economic downturn.
Such ventures can be funded in part by reducing unnecessary or overlapping spending and strengthening the review process for state-funded projects.
As of last year the government's outlays hit 325.5 trillion won, with 53.3 percent being "flexible" expenditure that was used on various projects.
The view within the transition team is that up to 4 trillion won can be saved and set aside if tighter control is exercised over the flexible expenditure portion of state outlays.
To generate the extra cash, the government has already said it will reduce tax loopholes and cut back on numerous year-end deduction and refunds that reached 13 trillion won in 2011.
Moreover, every effort will be made to limit spending of major social overhead capital projects, which in the past required substantial injection of taxpayer money.
Besides generating more money to follow through on the president-elect's pledges, the finance ministry said it will come up with policies that can fuel business investments, although for the time being more attention will be centered on dealing with the global economic slowdown. Areas of concern include the rapid appreciation of the Korean won vis-a-vis other currencies that can make South Korean products more expensive abroad.
South Korea, which is heavily dependent on overseas markets for its growth, is expected to grow 2.8 percent in 2013. The rate is higher than the low 2 percent GDP growth being estimated for last year, but lower than 3.6 percent growth reached in 2011.
The finance ministry, however, did not touch on the issue of calling for an extra budget this year that is being floated by some people in the ruling party as a way to fund the extra outlays for welfare. (Yonhap News)