SOC budget to be cut next year

The social overhead capital (SOC) budget will take a downward turn for the first time ever. According to the Ministry of Construction and Transportation, at the Planning and Budget Ministry interim evaluation for next year`s budget, the SOC budget of 18 trillion won requested by the Construction and Transportation Ministry was cut by 7 trillion won. The government budget proposal is to be confirmed by the end of this month and the SOC budget is expected to be reduced by 18% from this year`s 14.1 trillion won.

Despite the contributions made in terms of unemployment reduction and the recovery of the construction market through SOC budget increases in the IMF years of 1998 and 1999, the Planning and Budget Ministry drastically reduced SOC spending as social welfare and regional coffers will require larger shares of the budget. Consequently, the Construction and Transportation Ministry is concerned that large scale SOC projects such road construction, airports and waterworks may be affected. In particular, the construction industry, which is in a state of crisis due to a cash crunch and a reduction in orders, will see many companies go under.

The SOC budget had previously increased considerably each year, from 6.7 trillion won in 1995 to 8.3 trillion won in 1996, 10.3 trillion won in 1997, 11.6 trillion won in 1998, 13.4 trillion won in 1999 and 14.1 trillion won this year.