South Korea's plans to curb 2016 spending face political pressure

The South Korea government wants to keep a tight leash on the 2016 budget, but it is facing pressure from the ruling Saenuri Party to increase public spending in the face of sluggish economic growth. "The government has formed a very conservative budget for next year and aims to keep government debt within 40 percent of gross domestic product," Kim Sung-tae of the Saenuri Party told a press briefing after a meeting with government and party officials to discuss the budget on Thursday.
"However, we feel that the plans are too conservative and have strongly asked the government to increase next year's spending." Last year, the government projected total sovereign debt to rise to 35.7 percent of GDP, or 570.1 trillion won ($481.67 billion), in 2015. Kim's comments were made soon after Finance Minister Choi Kyung-hwan said the budget proposals would aim maintain a sound fiscal position.
South Korea's economy is struggling to recover amid a collapse in exports and a downturn in consumption, which recently took a hit from the outbreak of the Middle East Respiratory Syndrome virus. The lawmaker said the party had asked for more spending in order to boost the economy, create more jobs and increase household income. "The government said it had no choice but to be conservative but there is a need to boost spending to strengthen the social safety net for the socially needy," Kim said.
Finance Minister Choi is also a member of the ruling party, but he works independently of the Saenuri Party since taking office last July. Still, the two need to find common ground before the budget is submitted to parliament. Commenting on the finance minister's intention to boost defence spending, Kim said the higher spending was aimed at bolstering combat power at the border with North Korea as well as anti-submarine warfare.
Tensions between North and South Korea were ratcheted up after the two exchanged fire last week, followed by unusually long marathon talks between high-ranking officials which concluded the multi-day military stand-off. The finance ministry will announce next year's budget plans in early September, after it which they will be handed to parliament for approval by end-December.