SEJONG, Sept. 1 (Yonhap) — South Korea on Tuesday proposed a record 555.8 trillion-won (US$469.8 billion) budget for 2021 to kick-start a post-pandemic economic recovery, create more jobs, and expand social infrastructure and welfare schemes.

The budget, which was endorsed by the Cabinet on Tuesday, represents an 8.5 percent hike from this year, according to the Ministry of Economy and Finance.

The budget calls for boosting spending on job creation and social welfare by 20 percent and 10.7 percent, respectively, with a 2.2 percent fall for education and a 5.5 percent hike in national defense outlays.

Expenditures on public works and safety has been increased by 4.4 percent with a 5.1 percent rise eyed for culture and sports.

The government will submit the budget proposal to the National Assembly on Thursday for approval, whose deadline is Dec. 2.

The 8.5 percent increase in the national budget is down from a 9.1 percent rise for this year and 9.5 percent rise for 2019.

According to the plan, the government expects to collect 483 trillion won in total revenue next year, up 0.3 percent on-year, including 282.3 trillion won in state taxes.’

The finance ministry said the expansionary fiscal policy should play a more active role in overcoming the coronavirus crisis, which is expected to have an unprecedented impact on the global economy.

“The government will boost the momentum of the economic recovery next year through an expansionary fiscal policy,” Finance Minister Hong Nam-ki told reporters.

Last week, the Bank of Korea sharply lowered its economic growth outlook for the South Korean economy for this year, expecting a sharper-than-expected contraction of 1.3 percent amid the deepening virus fallout.

The latest projection for the nation’s economy marked a sharp cut from the central bank’s estimate in May of a 0.2 percent contraction.

It would mark the worst performance since 1998, when the economy shrank 5.1 percent in the aftermath of the 1997-98 Asian financial crisis.

The bank also lowered its 2021 growth outlook to 2.8 percent from its earlier estimate of a 3.1 percent expansion amid the pandemic-caused economic uncertainties.

According to the budget proposal, a large bulk of spending was allocated to the health, welfare and labor sectors, for which about 199.9 trillion won will be set aside, up 10.7 percent from this year.’

In particular, 30.6 trillion won will be used to create jobs, a whopping 20 percent rise from the previous year.

The requested budget for national defense increased 5.5 percent to 52.9 trillion won next year to heighten military capabilities.

For education, the government will spend 71 trillion won next year, down 2.2 percent from a year earlier, while it asked for 27.2 trillion won and 21.8 trillion won to be spent on research and development, and public safety, respectively.

To boost consumption, 1.8 trillion won was earmarked to give shopping coupons to some 23 million people next year.

The fiscal deficit is estimated at 5.4 percent of the country’s gross domestic product (GDP) next year, compared with a deficit of 3.5 percent for this year, while the national debt-GDP ratio will rise 6.9 percentage points to 46.7 percent.

To cover the spending hike for next year, the ministry said it plans to issue some 90 trillion won worth of deficit-covering bonds.