SEOUL, April 21 (UPI) -- North Korea has recently convened a Cabinet meeting to approve the country's 2006 budget plan which focuses on agriculture and high-tech developments, a policy shift seen as taken to survive U.S.-led sanctions.
In the enlarged plenary meeting of the Cabinet, Premier Park Pong Ju and other North Korean officials discussed ways to revive the country's sluggish economy, which is likely to suffer another blow from the U.S.-led ban on transactions with bank accounts connected to North Korea.
"The Cabinet meeting discussed its agenda items on the results of the fulfillment of the state budget for 2005 and measures to implement the state budget for this year," the North's state-run Korean Central News Agency said.
The Cabinet meeting came after the Supreme People's Assembly, the North's rubber-stamp legislature, last week adopted the country's budget plan for this year with calls for national efforts toward development of agriculture and science and technology.
North Korea did not reveal its total budget for this year, saying only that it increased its state revenue by 3.5 percent from a year earlier, with expenditure for 2006 expected to be up 3.5 percent from 2005.
South Korean officials and analysts estimate North Korea's budget for this year at $2.94 billion or 419.7 billion North Korean won, up 3.5 percent from 405.7 billion won last year. A U.S. dollar is officially exchanged for 140 to 150 North Korean won. Officials here said they used an exchange rate of 143 won for one dollar.
North Korea initially allocated 388.6 billion won for last year's state expenditure, but used 4.4 percent more than the original plan to put total spending to 405.7 billion won.
The reclusive communist state rarely reveals the actual size of its budget, only specifying an increase or decrease in its income and expenditure. The most recent figure North Korea gave was 337.5 billion won for 2004 budget income and 348.8 billion won for that year's expenditure.
The 3.5 percent gain in the country's state expenditure for this year was down from last year's 11.4 percent gain. North Korea increased its revenue 15.1 percent last year from 2004, higher than this year's 7.1 percent on-year hike.
This year, North Korea allocated 15.9 percent of the total budgetary expenditure for national defense so as to bolster the country's leader Kim Jong Il's much-touted "songun (army-first) politics."
The figure has grown steadily from 14.4 percent in 2002 to 15.9 percent in 2005. The 15.9 percent of the total expenditure goes to 66.7 billion won or $466.7 million.
But the North's real defense outlay is more than its official figure because the country is believed to have hidden military spending in other categories, such as the expenditure for people's economy which is used for general economic development in industry, agriculture and science, among others.
The share of military expenditure to the total expenditure abruptly dropped to 17 percent in 1971 form the previous year's 31 percent with no valid explanations. The North's 1.1-million-strong armed forces, the world's fifth largest, are the backbone of Kim's iron-fisted rule.
North Korea has set aside the lion's share of the state expenditure to the people's economic outlays, which accounted for more than 60 percent of the budget.
Since 2000, however, the portion of the people's economy spending has dropped to a little higher than 40%, whereas expenditure for socio-cultural programs have boosted to more than 38 percent, compared with less than 20 percent until 1993. North Korea did not announce its budget between 1994 and 1999 when it was hit by economic crisis.
The outlays for socio-cultural programs are mainly devoted to political purpose, such as propaganda, publication, and leadership training, except for health and social welfare.
North Korea's spending on the personality cult of Kim Jong Il and his father and national founder, Kim Il Sung, are believed to be concealed in expenditures for socio-cultural programs because the cult worship has been conducted in the form of cultural events and education programs.
The socio-cultural expenditure has sharply increased since 2000, accounting for more than 38 percent of the total expenditure, an indication North Korea has still spent much of its resources on the personality cult of Kim Jong Il.
In particular, North Korea spent huge amounts of money to stage a two-month-long gala gymnastic and artistic performance show called "Arirang Festival" last year to mark the 60th founding anniversary of the ruling Workers' Party. The show centered on praising Kim Jong Il's leadership and his military-oriented politics.
North Korea, which held the first Arirang festival 2002 to celebrate Kim Il Sung's 90th birthday anniversary, reportedly plans to hold a third one next year despite its sluggish economy.
Despite its strong calls for development of science and technology at the parliamentary session, North Korea increased this year's spending for this sector only 3.1 percent from a year earlier, far lower than a 12.2 percent gain in agriculture and a 9.6 percent hike in heavy industry.
The slow increase in spending for the hi-tech sector indicates the impoverished country has a long way to go to achieve its target of becoming a high-technology powerhouse.
