South Korea is tightening its belt and reducing government spending to slow a rise in debt to keep the debt-to-GDP rate at that in the next five years.
Seoul’s finance ministry said it will also cut the ratio of fiscal deficit to GDP to 3-percent or lower from about 5-percent set for this year as it released the new administration’s fiscal policy plan on Thursday.
“The biggest difference from the previous administration’s is that we are using the managed fiscal balance to set the limit instead of the total fiscal balance. Also the fiscal rule will be simplified so it’s more like what other advanced countries use.”
Also, one of the major reforms will be in education as the number of young students are falling.
Rather than elementary and middle schools, there’ll be more financial grants allocated to high schools and universities.
The government announced its investment strategy to increase efficiency and encourage private sector-led investment.
For investment in R&D, it’s going to focus on strategic areas essential to national and economic security.
For small and medium companies, rather than giving out small amounts of support to all businesses, money will be allocated based on market demand.
Also, the government will abolish any unnecessary regulations on them.
There’ll also be more support and deregulation for universities to bring in students, and training to create jobs to cultivate
more professionals in key high-tech industries.
The government will prepare a new fiscal rule based on the plan by early September and put into effect as soon as the legislation process is complete in parliament.
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