SEOUL/SEJONG, Apr. 21 (Korea Bizwire) — The government plans to spend nearly 60 percent of this year’s budget in the first half in a bid to put the fizz back into the slowing economy, the finance ministry said Tuesday.
The plan comes amid escalating concern that Asia’s fourth-largest economy may grow at a far weaker rate than expected earlier due to slumping exports and persistently anemic domestic demand.
The finance ministry retains its 2015 growth forecast of 3.8 percent, but the Bank of Korea cut its outlook to 3.1 percent from an earlier 3.4 percent estimate on April 10, citing the weaker-than-expected recovery pace.
In a report to the National Assembly, the ministry said the government will frontload 59 percent of the 2015 budget in the first half, up slightly from the original goal of 58 percent.
“The current expansionary policy measures will be sustained until ordinary people can start feeling its benefits,” the ministry said.
It also said every effort will be made to push forward labor market reforms that could help create more jobs for young people and effectively deal with other outstanding issues facing the country’s labor market.
Concerning youth employment, the ministry said the creation of a financial reform committee last month could play a role in helping young people find work in the financial sector.
The ministry said that while there are lingering uncertainties, the national economy is showing signs of recovering from a weak performance in the fourth quarter of last year.
Gradual improvements in the real estate and stock markets coupled with low interest rates and fuel prices should generate recovery momentum in the coming months, it said.
On the controversial issue of tax refunds that caused a public outcry early in the year, Finance Minister Choi Kyung-hwan asked lawmakers to swiftly pass a bill that will permit the government to pay back taxpayers who inadvertently paid more dues for last year’s earnings.
If parliament passes the government bill, the government will move to pay back 422.7 billion won (US$390 million) in taxes, he said.