Spending by the country’s 64 pension funds and other state operational funds is expected to reach a record of more than 500 trillion won next year amid increased welfare costs.
In a report to the National Assembly on Thursday, the Ministry of Strategy and Finance said that such spending would reach 517.4 trillion won next year, up 4 percent from 497.5 trillion won this year.
This comes as the government is not able to financially support various projects with its tax revenue as it faces a revenue shortfall this year and next year, but plans to make this up by allocating those funds to back social welfare and small and medium enterprises.
The government has proposed a state budget plan of 357.7 trillion won 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 and the development of a creative economy.
The government will spend 105.9 trillion won for welfare and job creation, by far the biggest investment in the sectors by a single government.
Korea’s state funds will “directly and indirectly” provide finances to support the administration’s goals, as well as to back research and development projects and pay back interest on government debt.
