The government approved next year’s budget of 470.5 trillion won, up 9.7 percent over last year. The budget proposal calls for another 23.5 trillion won in spending, a whopping 22 percent jump in the job creation sector. A cabinet meeting presided over by President Moon Jae-in on Aug. 28 gave the go-ahead to the 2019 budget proposal, the national fiscal management plan between 2018 and 2022 and the 2019 state tax revenue budget proposal.

The 9.7 percent year-on-year growth in spending is the biggest jump in a decade since 2009’s 10.6 percent increase in the wake of the global financial crisis.

Tax revenues for 2019 are expected to raise 11.6 percent year-on-year, so the tax burden ratio would top 20 percent for the first time. The 2019 budget plan calls for the highest growth rate in the job creation sector.

The government will set aside 19.2 trillion in 2018 for the sector and plans to appropriate 23.5 trillion won for next year. In 2019, the government plans to hire 36,000 freshmen government officials and create 94,000 social service jobs.

The government approved a 12.1 percent year-on-year surge to 162.2 trillion won in the health, welfare, and labor sector, accounting for 34.5 percent of the total.

The industry, SME and energy sector budget will likely see a 14.3 percent jump to 18.6 trillion won. The industry budget, which saw a sharp reduction this year, will jump 14.3 percent to 18.6 trillion won next year.

Earmarked for the R&D sector budget is 20.4 trillion, a 3.7 percent year-on-year increase rate. The R&D budget tops the 20 trillion milestone 11 years after surpassing the 10 trillion won mark in 2008. Unlike this year, the government plans to reflect more projects designed to boost the growth of the national economy in the 2019 budget.

President Moon said the past economic paradigm made the national economy fall into a low-growth quagmire, severe income bipolarization, and unfair trade economy, and people-oriented new economic paradigm is the government’s pursuing of the missions of the times to resuscitate the national economy, which falls in a crisis.

Explaining the reason behind a massive fiscal expansion even though the national economy is not in a crisis, Deputy Prime Minister-Minister of Economy and Finance Kim Dong-yeon said in a pre-briefing session with reporters at the Sejong Government Complex on Aug. 24 that now is the time when money is spent for structural changes and reform of the national economy. He added that bigger returns through fiscal spending and state tax revenue outlooks are to be good this year like last year.

Chances are high that the tax revenue situation will be get worse than now. The national debt to GDP is predicted to grow to 40.2 percent in 2020, surpassing the 40 percent milestone for the first time. The figure is forecast to rise to 41.6 percent in 2022.

Deputy Prime Minister and Minister Kim Dong-yeon of the Ministry of Economy and Finance (MOEF) speaks at a session on the 2019 government budget plan at the Sejong Government Complex on Aug. 24. (Photo: MOEF)