North Korea has a new bud­get and it’s full of fiscal hi­jinks

Sun.Star Pampanga - - WORLD! -

TSil­ber­stein said. “Over the years, Py­ongyang’s eco­nomic re­port­ing has got­ten much closer to be­ing some­what cred­i­ble, but re­gard­less of ac­tual per­for­mance, it would have likely been dif­fi­cult to pub­li­cize any losses for last year in par­tic­u­lar.”

North Korea is no­to­ri­ously re­luc­tant to pro­vide trans­parency on just about any­thing.

It stopped re­veal­ing its ac­tual bud­get num­bers in 1981, opt­ing in­stead for per­cent­ages of growth or of the to­tal, as it did again this year. It hasn’t pub­lished macroe­co­nomic per­for­mance in­di­ca­tors since 1965. Most for­eign ex­perts rely in­stead on data com­piled by the South Korean gov­ern­ment.

Be­cause of the way it’s re­ported, it’s not even en­tirely clear if the bud­get is bal­anced.

That said, the bud­get’s high­lights in­clude:

— Rev­enues are ris­ing. For fiscal 2017, North Korea fore­cast a 3.1 per­cent rev­enue in­crease, which it later re­vised up, to 4.9 per­cent. The in­crease this year is fore­cast to be about the same, 3.2 per­cent. To­tal ex­pen­di­tures are ex­pected to grow 5.1 per­cent, down in per­cent­age terms at least, from 5.4 per­cent for last year’s bud­get. To Sil­ber­stein, this has a some­what re­al­is­tic ring to it. “His­tor­i­cally, com­mu­nist economies would of­ten claim that plans had been over-ful­filled by fac­tors far too high to be re­al­is­tic and that is clearly not the case here.”

— De­spite its of­fi­cial claim of hav­ing a cen­trally planned so­cial­ist econ­omy, Py­ongyang re­lies heav­ily on lo­cal gov­ern­ments for nearly a quar­ter of the funds it needs to pay for it­self. Rev­enues col­lected by the cen­tral gov­ern­ment now ac­count for 73.9 per­cent of the to­tal — and the re­main­der, many North Korea watch­ers sus­pect, may boil down to prof­its made on the quasi-of­fi­cial mar­ket econ­omy that has flourished un­der Kim.

— Sanc­tions not­with­stand­ing, North Korea is hop­ing to reap rev­enues from its spe­cial eco­nomic and trade zones, which of­ten de­pend on in­vest­ment or joint ven­ture ar­range­ments from Chi­nese and, to a lesser de­gree, Rus­sian part­ners. On the flip side, it ex­pects to earn less from its co­op­er­a­tives, real es­tate rental in­come and sales of prop­er­ties.

— De­fense spend­ing stays at 15.8 per­cent, roughly the same as last year.

— A big um­brella cat­e­gory called “the de­vel­op­ment of the na­tional econ­omy” now ac­counts for a 47.7 per­cent share, pre­sum­ably re­flect­ing Kim’s vow to im­prove the peo­ple’s stan­dard of liv­ing.

“The state bud­get for this year will be suc­cess­fully car­ried out through metic­u­lous or­ga­ni­za­tion of eco­nomic op­er­a­tion and com­mand and thus fi­nan­cially back the build­ing of a pow­er­ful so­cial­ist coun­try,” North Korea’s fi­nance min­is­ter, Ki Kwang Ho, said in an­nounc­ing the bud­get to par­lia­ment.

What’s not in the bud­get is of­ten more im­por­tant than what is.

“It’s laugh­able they have the au­dac­ity to put out a bud­get re­port that doesn’t ref­er­ence the shock­ing drop in trade, at least as an­nounced of­fi­cially by China,” said Wil­liam Brown, a re­tired U.S. gov­ern­ment econ­o­mist who has worked for the Com­merce De­part­ment and the CIA and is now at Ge­orge­town Uni­ver­sity. “From this data it doesn’t look like any­thing is hap­pen­ing. I had hoped to see a big rise in prop­erty sales — pri­va­ti­za­tion — but that doesn’t show up here.”

Brown noted North Korea’s use of per­cent­ages makes the bud­get all the more opaque.

“One thing that al­ways catches peo­ple is the trans­la­tion of growth ter­mi­nol­ogy,” he said. “The Kore­ans, like the Chi­nese, in­clude the base and say growth was 100.8 or so, mean­ing a 0.8 per­cent in­crease. But without the ac­tual num­bers, and no ref­er­ences to price changes, it’s im­pos­si­ble to know what it means.”

To those North Korean econ­o­mists, that’s un­doubt­edly a fea­ture, not a bug.

OKYO (AP) — Imag­ine a na­tional bud­get that re­flects steady growth, gives a healthy boost to science and tech­nol­ogy while re­serv­ing big slices of the over­all pie to de­fense and so­cial spend­ing. It’s gen­er­ous with in­fra­struc­ture im­prove­ments, and is cer­tain of un­ques­tion­ing, unan­i­mous ap­proval in par­lia­ment.

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