More years needed for S. Korea to achieve balanced budget: sources

SEOUL, June 28 (Yonhap) -- It will take more time than expected for the South
Korean government to achieve a balanced budget as it must stick to its
"expansionary" policy to accelerate an economic recovery, a lawmaker and
government sources said Sunday.
The government earlier predicted that the deficit will amount to 10.4 trillion
won (US$8.1 billion) this year and that the national debt will equal 32.3
percent of gross domestic product. In November, the finance ministry said it
aimed to avoid a deficit and lower the debt ratio to 30.9 percent by 2012.
"In a recent meeting with lawmakers, the ministry told us that it will take three
to four more years than earlier targeted to achieve a balanced budget," Suh
Byung-soo, a lawmaker of the ruling Grand National Party and the head of the
parliamentary committee supervising the nation's financial policy, told Yonhap
News Agency in a telephone interview.
Buffeted by a protracted global downturn last year, Seoul has been intensifying
economy-bolstering efforts with diverse tax cuts and additional fiscal spending.
In April, the parliament approved a 28.4 trillion won extra budget to counter the
global recession and help shore up the sagging economy.
The additional spending, to be secured primarily through debt sales, raised
concerns about the nation's fiscal soundness.
Those stimulus and expansionary measures will likely drive up the shortfalls for
this year to 51 trillion won, or around 5 percent of GDP, according to the latest
government estimate.
In a recent report, the Organization for Economic Cooperation and Development
called for policymakers here to step up efforts to balance the country's budget
by scaling back spending.
The government shares that view. In its economic management plan unveiled last
week, the finance ministry said that it will increase efforts to balance the
country's budget in the mid term by solidifying its tax revenue base and spending
carefully.
The finance ministry, however, added that it will have to "stick to its
expansionary policy for the time being" to buttress an economic recovery.
"If we are forced to choose between an economic recovery and fiscal soundness,
our top priority is to boost the economy," a ministry official said. "Against
this backdrop, it is inevitable to delay the target year to achieve a balanced
budget."
kokobj@yna.co.kr
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