South Korea’s parliament approved this year’s government budget bill late on Saturday, just half an hour before the new year began and after a near month-long delay due to disputes between the ruling and opposition parties.
The 325.4 trillion won (US$282.5 billion) budget bill, little changed in size from the government’s earlier proposal, aims to boost welfare spending in a year when two nationwide elections will he held.
The government still aims to cut the fiscal deficit to 1.1 percent of GDP this year from last year’s target of 2 percent by scaling down construction and other spending, the finance ministry said in a statement.
Government debt is set to fall to 33.3 percent of GDP this year from a projected 35.1 percent last year, although the absolute amount is set to rise slightly, the ministry said.
South Korea President Lee Myung-bak’s party has suffered defeats in a few recent by-elections and re-elections amid a public outcry over high inflation and slow income growth, and he has been moving to boost welfare spending to woo back voters.
Welfare spending is set to grow by 7.2 percent to 92.6 trillion won, or 28.5 percent of the total planned spending, outpacing a 5.3 percent rise in total spending.
South Korea’s single-chamber National Assembly missed the Dec. 2 deadline as opposition parties had boycotted in protest at the ruling party’s ratification of the free trade pact with the US in late November.
The main opposition Democratic Party, with about 30 percent of the total seats, stayed away on Saturday in protest at failed negotiations over other issues, but did not block the vote by the majority-holding ruling party, state media reported.
The government expects the country’s economy, the fourth-largest in Asia, to keep growing despite cooling demand from debt-stricken Europe, but it kept growth in overall budget spending lower than its projected revenue growth.