The government proposed to increase its spending next year by 5.5 percent to 326.1 trillion won ($286.2 billion), prioritizing job creation and fiscal soundness to protect the country’s economy from ongoing debt crises abroad.

The Finance Ministry said the 2012 budget plan will cut the government deficit to 1 percent of gross domestic product from the 2 percent expected for this year.

General welfare took up the single largest slice out of the total budget with a record 92 trillion won, or 28.2 percent, followed by 56.6 trillion won on public agencies and 45.3 trillion on education.

“It is inevitable that our budget puts first priority on jobs chiefly to minimize the impact of the global fiscal crisis on the domestic economy,” Finance Minister Bahk Jae-wan told reporters.

“Creating jobs would eventually achieve a virtuous cycle of growth and better welfare,” he added.

Under the plan, the government will spend less than it takes in until it achieves a budget balance in 2013 -- the year the Lee Myung-bak administration targeted to make revenues equal expenditure.

The government expects total revenue to increase by 9.5 percent to 344.1 trillion won.

Seoul’s budget for job creation will expand by 6.8 percent to 10.1 trillion won. Upon approval from lawmakers, job seekers in their teens and twenties will become eligible for state-run programs divided into four categories -– funding for youth start-ups, high school graduates, culture and service sector jobs. Spending on research and development will also be raised to 16 trillion won next year from 14.9 trillion won this year. National defense spending will rise by 5.6 percent to 33.2 trillion won to meet the growing need for a strong national defense.



By Cynthia J. Kim
(cynthiak@heraldcorp.com)