S. Korea`s budget spending to increase 6.5 pct in 2009

SEOUL, Sept. 30 (Yonhap) -- The South Korean government said Tuesday it plans to
increase its budget spending for fiscal 2009 by 6.5 percent and will sharply
expand funding into research and development (R&D), social infrastructure and
other areas aimed at creating jobs and boosting economic growth potential.

The nation's budget, including state-run funds, will amount to 273.8 trillion won
(US$230 billion) next year, compared with this year's estimated 257.2 trillion
won, according to the Ministry of Strategy and Finance.
The budget spending plan, finalized at a Cabinet meeting earlier in the day, will
be presented to the National Assembly in October for approval, the ministry said.
"Next year's budget is intended to help create jobs and provide a platform for
our economy to make a leap forward," Finance Minister Kang Man-soo told a press
briefing.
President Lee Myung-bak has pledged to stimulate domestic demand and corporate
investment by easing regulations and providing tax reductions. The new budget
plan was crafted to support the broad economic policy direction of the incumbent
government, Kang said.
According to the ministry, the nation's R&D spending will increase 10.8 percent
year-on-year to 12.3 trillion won, while that for social infrastructure will
expand 7.9 percent to 21.1 trillion won.
Military-related budget spending will amount to 28.6 trillion won next year, up
7.5 percent from a year earlier. The nation will spend 73.7 trillion won on
social welfare, up 9 percent, and education spending will grow 8.8 percent to
38.7 trillion won.
Budget revenues, including profits from state-run funds, are estimated at 295
trillion won, up 7.6 percent from this year's 274.2 trillion won, the ministry
said.
The state revenue forecast was made on the assumption that the economy will grow
around 5 percent. Growth for this year was estimated to be in the upper 4-percent
range amid high oil prices and a global economic slowdown.
"From the second half of next year, the global economy is expected to turn
around, which will help put the local economy back on track, though financial
instability is emerging as a new downside factor," Kang said.
The country's tax burden ratio, or the ratio of tax to gross domestic product
(GDP), will be 22.1 percent next year, compared with this year's 22.2 percent,
according to the ministry. The figure will fall to 20.8 percent by the end of
2012, it said.
State debts are expected to reach 333.8 trillion won next year, compared with
this year's 317.1 trillion won.
Based on the estimate, the ratio of national debt against GDP will stand at 32.3
percent next year, down from this year's 32.7 percent.
The ministry said the sale of state bonds will grow to 22.3 trillion won next
year from this year's 17.4 trillion won. The debt sales will include 15 trillion
won worth of bonds to stabilize the foreign-exchange market.