South Korea to raise 2016 fiscal budget

South Korea plans to raise its 2016 fiscal budget by 3 percent compared with this year, bolstering worries about rising fiscal debts, a government report showed.

Government budget for 2016 would increase to 386.7 trillion won ($320.6 billion) from 375.4 trillion won for 2015, according to the Ministry of Strategy and Finance.

Given the supplementary budget added in the second half of this year to boost the economy, the actual growth rate of the fiscal budget was 5.5 percent, not 3 percent.

The 2016 fiscal budget plan, which was endorsed during the cabinet meeting on Tuesday, would be submitted to the National Assembly by the end of this week, Xinhua reported on Wednesday.

The ratio of sovereign debts to gross domestic product (GDP) was estimated by the finance ministry to increase to 40.1 percent in 2016, topping 40 percent for the first time in the country's history. It was forecast to advance to 41.1 percent in 2018 before falling to 40.5 percent in 2019.

Despite concerns about sovereign debts, fiscal soundness could be maintained after reinvigorating the economy, Finance Minister Choi Kyung-hwan said, asking for the understanding of temporary increase in the debts.

The 2016 welfare budget, including health care and labour, amounted to 122.9 trillion won, up 6.2 percent from a year earlier. The figure accounted for 31.8 percent of the total budget, marking the highest in history.

The budget for national defence rose 4 percent from a year earlier to 39 trillion won in 2016, with 4.7 trillion won set aside for foreign affairs and unification in 2016, up 3.9 percent compared with 2015.

The ministry expected the South Korean economy to grow 3.3 percent next year, a downward revision from 3.5 percent estimated three months earlier.