S. Korea‘s mandatory spending to exceed half of fiscal spending

South Korea’s mandatory spending will likely exceed 50 percent of fiscal spending in 2018, raising concerns that the government‘s capacity to counter the economic slump could weaken down the road, a report showed Monday.

According to the report submitted by the government to the National Assembly, the government’s mandatory spending will rise from 172.6 trillion won (US$144.5 billion) in 2015 to 183.4 trillion won in 2016, 195 trillion won in 2017 and 206.5 trillion won in 2018.

This represents an annual growth rate of 6.1 percent.

Mandatory spending refers to payments related to interest, social security, pension and other areas that the government has little control over.

Its ratio of total fiscal spending will stand at 46 percent in 2015, and then rise to 47.4 percent in 2016, 49.1 percent in 2017 and 50.8 percent in 2018.

A rise in the ratio of mandatory spending could mean less capacity for the government to tap into when economic growth slows, given that fiscal spending is used as a major tool for stimulus measures. (Yonhap)