SEJONG, April 3 (Yonhap) -- South Korea will place its top priority on creating jobs this year as part of its efforts to stabilize the livelihoods of its people and eventually reinvigorate the country's slowing economic growth, the finance ministry said Wednesday.
The government will also work hard to strengthen its ability to cope with financial market volatility by pushing to ease excessive capital flows in and out of the country, the ministry said in a briefing on 2013 policy plans to President Park Geun-hye.
"With an aim to achieve economic revival and happiness for people, we will push for job creation, stabilization of livelihoods and the economy, and secure money needed to fulfill the government policy agendas," the ministry said.
The ministry cited front-loading of its fiscal spending and a supplementary budget as major ways to stimulate job creation and strengthen the country's economic growth momentum.
In particular, the ministry said that it will draw up an extra budget designed to make up for the government's expected revenue shortfalls estimated at about 12 trillion won (US$1.07 billion) and expand fiscal capacity to bolster overall economic activities. Though it did not unveil its size, the ministry said that it will announce detailed plans this month.
It also plans to front-load more than 60 percent of its fiscal spending during the first half of this year. Under the plan, the ministry will spend over 173.6 trillion won out of 289.1 trillion won in the first half.
South Korea's economy is showing signs of losing its momentum in the face of lingering uncertainty at home and abroad.
The gross domestic product (GDP) grew less than 1 percent on-quarter for the seventh straight quarter, which is the longest streak of such low growth rates. The economy grew 2 percent in 2012, the slowest gain in three years.
The government recently slashed its growth outlook for this year to 2.3 percent from the 3 percent it predicted in December. Finance Minister Hyun Oh-seok said that the economy "lost much of its vitality" and its future situations are "not favorable."
The government expects that such stimulus measures as the envisioned extra budget and the recently unveiled tax breaks to boost the sluggish housing market will help raise the overall economic growth rate to the upper 2 percent range this year.
"If we manage our economy well through such measures, we will be able to achieve a 3 percent growth in the second half... Annually, we expect that the growth rate will improve to the upper 2 percent range," Vice Finance Minister Choo Kyung-ho told reporters.
Meanwhile, in order to brace better for external risk factors, the ministry said that it will maintain its debt and foreign currency liquidity at "appropriate levels."
It also will push for strengthening its "macro-prudential" measures in order to ease excessive capital flows in and out of its financial markets, citing previously enforced measures such as bank levies and tighter regulations on banks' foreign exchange derivatives positions.
On how to secure money needed to carry out the government's policy agendas, the ministry said that it will focus on the "underground economy," which refers to a market where undetected and unregulated business activities are taking place.
The government, which was inaugurated in late February, is known to need 135 trillion won for the next five years to fulfill all of its campaign pledges, including expanded welfare programs.
Regulating the underground economy has been cited as a main tool to broaden the government's tax revenue base and help finance the additional spending.
The government estimates that its size is about 20-25 percent of the country's GDP. The ministry said that it will push to lower the ratio to 10-15 percent in the long term.
In a related move, more shops and businesses will be obliged to issue cash receipts, which the ministry expects will result in detecting cash-based transactions. It also plans to beef up regulations on tax evaders and intensify efforts to find their concealed wealth.
Through such efforts and others, the ministry said that it will increase tax revenues by 53 trillion won over the next five years.
On the spending front, the ministry said that it will save a total of 81.5 trillion won by streamlining the overall spending structure.
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