The South Korean government proposed on Tuesday a 2013 budget that includes bigger spending on infrastructure, job creation and welfare as it seeks to mitigate the impact of the global economic slowdown.

The proposal -- to be presented to parliament by next month -- calls for total spending of 342.5 trillion won ($306 billion) for next year, a 5.3 percent rise over this year, the finance ministry said in a statement.

Total income next year is forecast to grow by 8.6 percent to 373.1 trillion won, leaving a fiscal deficit for 2013 equal to about 0.3 of percent gross domestic product (GDP) -- compared with 1.1 percent estimated this year.

The aim is to balance the budget in 2014, the ministry said, revising its previous goal of achieving fiscal balance by next year.

Overall sovereign debt will be cut to 33.2 percent of GDP next year, compared with 33.3 percent this year.

"Reviving the economy... was the first priority, followed by balanced budget, job creation and social welfare respectively," Vice Finance Minister Kim Dong-Yeon told reporters.

Asia's fourth-largest economy is faced with "rising fiscal threats" such as increasing economic uncertainty at home and abroad and growing demand for social welfare in one of world's fastest aging societies, the ministry said.

Kim called the 0.3-percent fiscal deficit forecast for 2013 "an excellent compromise" between the need to provide stimulus spending and fiscal balance.

The government expects the country to run a fiscal surplus of 0.1 percent of GDP in 2014 and 0.5 percent of the GDP in 2016, he added.

The budget assumes economic growth of 4.0 percent in 2013, weaker than the 4.3 percent estimated by the government in June but higher than the mid-3.0 percent growth forecast by many private think tanks.

The International Monetary Fund said last week the South's economy would grow 3.9 percent next year, citing the impact of the eurozone crisis on exports.

In a bid to revive demand at home and help exporters, the government plans to spend 78 trillion won to support small- and mid-sized firms and 300 trillion won on loans and insurances for exporters.

Spending on new or upgraded roads, railways, ports and other infrastructure will be increased 3.6 percent to reach 23.9 trillion won.

Welfare spending, including the government's top policy priorities of job creation and childcare support, will increase 4.8 percent to a record 97.1 trillion won.

The budget earmarks 10.8 trillion won to create 590,000 new jobs next year, up nearly nine percent from 2012.

channelnewsasia.com