(Unofficial Translation)

The role of fiscal spending is more important than at any time before. More than anything else, we have to overcome the uncertainty of the external conditions surrounding our economy. Japan’s economic retaliation in addition to the faster-than-expected global economic downturn and trade tensions between the United States and China are stoking our economic uncertainty. For heavily export-dependent Korea to cushion these external shocks, we need to urgently spur innovative growth and transform our fundamentals into those of a pace-setting economy. To this end, fiscal spending should play an aggressive and proactive role.

Reinforcing the foundation of an inclusive nation, whose cornerstone has just begun to be laid, is another task that cannot be halted. When economic conditions worsen, fiscal outlays should be increased to help protect the vulnerable in society and raise the earnings of low-income families. This is the inherent function of fiscal spending.

Over the past two years, the Government’s fiscal investment has generated a lot of positive changes.

The expansion of government funding to support the fields of data, network and artificial intelligence – the core infrastructure of the Fourth Industrial Revolution – has led to us gaining a dominant share of the global 5G market. Budget spending in support of startups has helped raise the number of unicorn enterprises and investments in business ventures to all-time highs. Increased earmarks for job creation have served as a buttress to prevent the employment situation for society’s most vulnerable from deteriorating and have provided practical assistance to young job seekers. These results point to the fact that timely fiscal investments are a crucial tool for leveraging an opportunity for growth and building a sustainable future in which all thrive together. We must produce more and more of these accomplishments.

The Government has drawn up next year’s budget in an expansionary manner with a consolidated take on the pressing situations inside and outside the country and the fiscal conditions. Such international organizations as the IMF and OECD recommend that Korea continue to implement an expansionary fiscal policy. Our country has sufficient means to do so as our debt to GDP ratio is far lower than those of other OECD members whose average exceeds 110 percent.  

The Government’s budget plan this time is particularly focused on laying the foundation for us to build a strong economy and a strong country that cannot be shaken.

The focus has been placed on fiscal investments to help accelerate our country’s innovative growth. To this end, we will drastically increase the funding that fosters new industries to generate new income sources and the national R&D expenditures focused on creating future growth engines. In particular, the Government has decided to invest 2.1 trillion won – more than double this year’s amount – to help strengthen the competitiveness of our materials, parts and equipment industries in the face of Japan's export restrictions and economic retaliation.

We've also expanded support for economic revitalization. Through trade financing to help exports and government-backed financing to boost investments, we’ve significantly increased the budget to assist business efforts and to help strengthen the competitiveness of our mainstay industries such as manufacturing.

When local economies rebound, the entire national economy will be able to regain its vitality. Along with the funds allocated to revitalize local economies by building the infrastructure important for everyday life, funds have been earmarked to ensure that 33 specified projects for balanced national development will be implemented in earnest starting next year. Funding tailor-made to support the areas designated as special regulation-free zones has been included in the budget.

We’ve also increased funding to support the strengthening of our self-reliant defense and diplomatic capabilities, the foundation for a strong nation. The defense budget is up 7.4 percent from this year’s level; Over 50 trillion won has been set aside for the first time. With the overriding goals of localizing the production of weapon systems and making them more sophisticated, we will reinforce our country’s combat power by building next-generation homegrown submarines and will secure core technologies by significantly enhancing defense sector R&D. Focus will be placed on ensuring that the defense industry benefits the private sector.

With an eye toward the four major powers and strategic regions related to our New Southern and New Northern policies, we’ve increased funding for public diplomacy and overseas development assistance.

The Government intends to continue to increase the budget going forward in a way that strengthens cooperation with the international community and helps our people and businesses enter other countries.

The Government has made elaborate efforts concerning those parts of the budget directly related to the people’s daily lives. In a bid to minimize blind spots in the social and employment safety nets, family support obligations under the National Basic Living Security Act have been further eased. In the same context, the Government also allocated funds to implement an employment support system designed to provide unemployment insurance to the marginalized and to help them find jobs. Free education for high school students has also been expanded.

Assistance for seniors, young adults and less established self-employed business owners will also be increased. The number of jobs available for the elderly will rise to 740,000, and the basic pension for seniors will increase to 300,000 won per month. Housing support for young adults will be strengthened. To further support job creation, the Government will also drastically increase the number of SMEs receiving subsidies to hire additional employees. We will also expand the number of young adults eligible for the financial support provided after two to three years of employment with an SME or mid-market company. Loans to less established, self-employed business owners and microbusiness owners will be expanded. To boost small businesses in residential neighborhoods, more gift certificates designated for certain local areas and traditional markets will be issued.

The part of the budget allocated to public safety has been drastically increased. Funding to reduce fine dust has more than doubled, and a smart water supply system will be introduced to resolve problems related to “reddish” tap water from rusted pipes.  

Fiscal spending is a means to realize national policies, and this budget proposal reflects the direction that our society should take as well as its goals. The budget has been drawn up in a way that reflects the Government’s exceptional determination to facilitate a strong economy and create a strong country amid Japan’s economic retaliation, and thus, the process going forward is all the more important. In fact, our economy would have been steered in this way regardless of Japan’s economic retaliation. Japan’s actions only made the direction more pronounced. I urge you to do all you can to seek the National Assembly’s understanding and cooperation so that a broad public consensus regarding next year’s budget can be formed and the Assembly’s budget deliberations in the months to come can proceed smoothly in line with the people’s expectations.