Invest KOREA

South Korea's first-half fiscal spending was smaller than its target as the government trimmed its expenditures in an effort to tame high inflation, the finance ministry said Wednesday.

The government spent a total of 154.5 trillion won (US$146.4 billion) in the January-June period, or 56.8 percent of the nation's annual fiscal spending plan worth 272.1 trillion won, according to the Ministry of Strategy and Finance.

The first-half spending ratio, however, was lower than the government's initial target as it ran its fiscal spending plan in a "flexible" manner to take into consideration the concerns over growing inflationary pressure, the ministry said.

The government earlier aimed to frontload 57.4 percent of its annual fiscal spending during the first half in order to help the ongoing economic recovery.

The target-missing fiscal spending came as South Korea, Asia's fourth-largest economy, is waging an uphill battle to rein in persistent inflation.

South Korea's consumer prices jumped 4.4 percent last month from a year earlier, quickening from a 4.1 percent advance in May. Late last month, the government raised its annual inflation target to 4 percent from 3 percent.

The first-half spending ratio has been declining over the past few years. In 2009, the government frontloaded 62.8 percent of its budget during the first half as it struggled to rejuvenate the sluggish local economy. Last year, the ratio fell to 61 percent.

Source: Yonhap News (July 20, 2011)