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S. Korea needs spending reform to balance budget: minister
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South Korea needs to carry out aggressive spending reforms in order to achieve a
balanced budget by 2013, the nation's top economic policymaker said
Tuesday.
Earlier this month, the finance ministry unveiled a mid-term fiscal management plan designed to help the government achieve a balanced budget by 2013, one year earlier than its previous target deadline.
Under the plan, the ministry said that it will limit its annual expenditure growth to 4-5 percent and maintain a 7 percent fiscal income growth from 2011 to 2015.
"As we moved up the schedule for a balanced budget by one year, we now have to push for an aggressive reform of government spending," Finance Minister Bahk Jae-wan told lawmakers during a parliamentary audit. "It can be achieved if we keep the expenditure growth rate 3 percentage points lower than revenue growth."
South Korea remains in relatively good shape in terms of fiscal soundness, but there have been growing calls for increased spending to improve the social safety net.
The ministry earlier said that it will streamline tax exemption and benefit programs, while pushing to expand the overall tax revenue base. It also plans to improve its spending efficiency by removing any redundancies and waste of taxpayers' money.
Meanwhile, when asked if the government could prepare a mid-term tax policy management plan to provide broad policy direction, Bahk responded positively, saying that he will think about the idea.
The government currently provides a fiscal management plan every year that covers about five years but it does not announce such a policy for taxation. Instead, the finance ministry unveils a series of tax revisions every year that mostly affect the government's tax measures in the following year.
Date
2011.09.20
Earlier this month, the finance ministry unveiled a mid-term fiscal management plan designed to help the government achieve a balanced budget by 2013, one year earlier than its previous target deadline.
Under the plan, the ministry said that it will limit its annual expenditure growth to 4-5 percent and maintain a 7 percent fiscal income growth from 2011 to 2015.
"As we moved up the schedule for a balanced budget by one year, we now have to push for an aggressive reform of government spending," Finance Minister Bahk Jae-wan told lawmakers during a parliamentary audit. "It can be achieved if we keep the expenditure growth rate 3 percentage points lower than revenue growth."
South Korea remains in relatively good shape in terms of fiscal soundness, but there have been growing calls for increased spending to improve the social safety net.
The ministry earlier said that it will streamline tax exemption and benefit programs, while pushing to expand the overall tax revenue base. It also plans to improve its spending efficiency by removing any redundancies and waste of taxpayers' money.
Meanwhile, when asked if the government could prepare a mid-term tax policy management plan to provide broad policy direction, Bahk responded positively, saying that he will think about the idea.
The government currently provides a fiscal management plan every year that covers about five years but it does not announce such a policy for taxation. Instead, the finance ministry unveils a series of tax revisions every year that mostly affect the government's tax measures in the following year.
Source: Yonhap News (Sept. 20, 2011)