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Restructuring of state spending needed to maintain fiscal soundness: senior official

All News 15:56 June 10, 2019

SEJONG, June 10 (Yonhap) -- A drastic overhaul of the country's state spending is necessary to maintain its fiscal soundness, a senior finance ministry official said Monday.

The restructuring "is a top priority that cannot be delayed," said Koo Yoon-cheol, vice minister of economy and finance, citing a looming gradual rise in government spending due mainly to a demographic transition.

This photo provided by the Ministry of Economy and Finance shows its vice minister, Koo Yoon-cheol (L), speaking during a meeting with officials of other ministries at a government building in Sejong, an administrative hub located 130 kilometers southeast of Seoul, on June 10, 2019. (PHOTO NOT FOR SALE) (Yonhap).

The finance ministry, along with other state agencies, has been working on measures to get rid of excessive spending while funneling more into core policies and projects, as part of efforts to raise the effectiveness of budget spending amid concerns that the country should shoulder a heavy burden for the aging population.

In May, the executive board of the International Monetary Fund said South Korea's potential growth has shrunk and its prospects are hampered by unfavorable demographics and slowing productivity growth.

The Organization for Economic Cooperation and Development said in May that South Korea faces the fastest population aging in the group of 36 mostly rich nations.

In 2017, the number of South Koreans over 65 accounted for 13.8 percent of the population. That number is projected to grow to 26.1 percent of the population by 2032 and 41 percent by 2060, according to Statistics Korea.

A country is classified as an "aged society" if people over 65 make up 14 percent of the population. If the numbers top 20 percent, the country is deemed a "super-aged society".


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