The government on Thursday proposed a state budget plan of 357.7 trillion won ($332.7 billion) for next year, up 4.6 percent from 342 trillion won this year.
The budget also included next year’s target revenue of 370.7 trillion won, down 0.5 percent from this year due to a tax revenue shortfall and delays in state asset divestiture.
The Ministry of Strategy and Finance said that the majority of its 2014 budget will be spent on welfare and job creation, in line with President Park Geun-hye’s key policy pledges promoting the well-being of the middle class.
The government will spend 105.9 trillion won for the two aims, by far the biggest investment in the sectors by a single government, as earlier announced by Deputy Prime Minister and Finance Minister Hyun Oh-seok last week.
The government’s proposal, which was approved by the Cabinet on Thursday, will be sent to the National Assembly early next week for a final endorsement.
Economic revitalization and growth are key focuses of government spending next year as part of efforts to create 646,000 jobs.
“The budget bill focuses on three main tasks: economic revitalization, implementation of key policies and maintaining fiscal soundness,” the deputy prime minister said.
“As the government believed, above all, in the importance of reviving the economy, its welfare policy had to be partially readjusted,” he added.
Welfare spending accounted for almost 30 percent of the budget, but the government retooled the basic pension system for senior citizens as it found it difficult to fulfill its pledge of giving pensions to all citizens aged 65 and over amid the growing state deficit.
It readjusted the plan to pay out between 100,000 won and 200,000 won to senior citizens in the bottom 70 percent in accordance with their standard of living. It also postponed to 2015 its plans of introducing measures to help lower college tuition costs.
Its education budget of more than 50 trillion won will be used to increase investment in joint research projects between universities and the business sector.
It also plans to spend about 5.3 trillion won on cultural projects as part of efforts to develop a creative economy, the ministry said.
Its defense spending will be 35.8 trillion won, and about 16 trillion won will be spent for public security.
Infrastructure spending will see a less-than-expected drop to 23.3 trillion won, down only 4 percent from this year. The ministry cited the need to improve regional economies through key infrastructure developments and maintenance. The ruling party had urged the government to keep its infrastructure spending at a “moderate level” that would not further aggravate its deficit next year.
The ministry said that it will seek to achieve fiscal soundness over the next five years by maintaining a steady spending increase that is within its revenue.
Further, it will aim to improve its fiscal position not only by reducing inefficient spending but also normalizing the underground economy.
