Dhaka, Bangladesh
Ensure efficient spending

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Ensure efficient spending

The government proposed Thursday a record 513.5 trillion won ($423.7 billion) budget for 2020, up 9.3 percent from this year. Given the government’s revenue is unlikely to increase, its 2020 budget represents an “exceptionally expansionary” spending plan. The increase rate is much higher than economic growth projected at the 2 percent level for next year. The mega-budget plan is aimed at coping with the protracted economic slump and adverse external factors. It also reflects the difficulties facing Korea Inc. The Moon Jae-in administration promised to spend 2.1 trillion won on developing core technology, commercializing designed products and expanding investment into plants and equipment. This sum marks a hefty 163 percent increase from last year. The government also will pour 5.5 trillion won into creating a “second venture boom,” while expanding investment into small and medium enterprises and the energy industry by 27.5 percent to 23.9 trillion won. If the government loosens its purse strings, it will surely help stimulate the economy. The problem is that money does not just grow on trees. The government will raise financial resources mainly by collecting taxes and issuing state bonds to fill up a deficiency. That will inevitably increase the national debt, posing burdens on future generations. Long-term fiscal prospects are also grim. Budgetary expenditure is expected to grow 6.5 percent on annual average until 2013, but the revenue increase will stand at 3.4 percent a year, swelling the state debt to more than 1,000 trillion won and pushing up the debt-to-GDP ratio to 46.4 percent. To reduce the burden on our children and grandchildren, government officials should make the best use of the budget to restore economic vitality. The intensive input of taxpayers’ money is aimed at creating a virtuous cycle, in which massive spending of taxpayers’ money leads to greater investment and higher growth. That is, the government’s spending should play an active role in putting the national economy back on the growth track. If the officials fail to do this, the “ultra-super budget” will fizzle out after creating a short-lived boom. Now is time for the government to show how efficiently it can use the financial resources available. –Japan Times

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