By Jhoo Dong-chan



The government has put forward a record high 513.5 trillion won ($423.7 billion) budget for next year to revitalize the country's ever-worsening economy. This is the first time any administration has proposed a budget of more than 500 trillion won.



The Ministry of Economy and Finance said Tuesday that the 2020 budget proposal represented a 9.3 percent increase from that of this year. Following a Cabinet review at Cheong Wa Dae, a budget bill will be submitted to the National Assembly early next week.



The figure is the steepest hike since 2009 when the budget was raised 10.6 percent from the previous year; and is the second consecutive increase of over 9 percent.



Under the current pace, Korea's national debt-to-gross domestic product (GDP) ratio is expected to approach 40 percent next year and reach 46.4 percent in 2023.



Deputy Prime Minister Hong Nam-ki said the government needs to expand spending under the current economic situation.



"The economy is sluggish," Hong said during media briefing on the 2020 budget.



"It's definitely an expansionary budget. Government spending should play a decisive role in helping the economy get back on track under the current economic situation."



The 2020 budget bill includes 23.9 trillion won to be spent on the industrial, small firms and energy sectors, up 5.2 trillion won or 27.5 percent from this year. It also earmarks 24.1 trillion won in spending on research and development (R&D), a 3.6 trillion won (17.3 percent) increase.



The boost in spending in the two areas shows the government's determination to reduce the country's heavy dependence on Japan for key industrial materials, parts and equipment, while bolstering Korea's leading position in artificial intelligence, bio-health, future cars and fifth-generation network services.



The budget also seeks a 12.8 percent increase in spending on the healthcare, welfare and labor sectors, at 181.6 trillion won. This follows a recent study on job security that issued a warning on the ever-worsening job market here.



According to Statistics Korea, the nation's jobless rate rose to 4 percent in June, the highest level for that month since 1999. The unemployment rate for young adults ― those aged between 15 and 29 ― rose to 10.4 percent in June from 9 percent the previous year.



Experts said the expansionary budget is a must under Korea's current economic situation, but the government also needs to monitor the growth of the country's fiscal deficit.



"The government's budget aims at strengthening industrial competiveness amid a worsening economy," said Yonsei University professor Sung Tae-yoon.



"A further expansion of the fiscal deficit could be an issue, but spending is a must at the moment. The government must monitor further developments closely."



LG Economic Research Institute researcher Lee Geun-tae agreed, but expressed reservations about the expansionary spending's effectiveness.



"The government has expanded its spending for years to boost the economy, but it has failed to reflect this," Lee said.



"Consumption, demand and exports are all currently underperforming. Government spending will help boost the economy to some degree, but is not the ultimate solution."



The Korean economy grew 1.1 percent year-on-year in the second quarter, after dipping 0.4 percent in the January-to-March period.

