North Korea underreporting defense spending, analyst says

By Elizabeth Shim  |  March 31, 2016 at 11:30 AM
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SEOUL, March 31 (UPI) -- There's more to North Korea's latest budget than meets the eye, and the country could be hiding military expenditures, South Korean analysts said Thursday.

The annual budget unveiled Wednesday at the ninth plenary meeting of the 13th Presidium of the Supreme People's Assembly indicated budgeted state expenditures had increased by 5.6 percent from 2015, Pyongyang's state news agency KCNA reported Thursday.

According to the statement from North Korea, the defense portion of the budget accounts for 15.8 percent of the total, a decline of 0.1 percentage point. The statement did not disclose a specific monetary amount for the budget.

The South's Korea Development Bank said in its analysis the North's total budget is estimated to be $7.71 billion, up from $7.3 billion in 2015. The defense portion of the budget was up by $60 million to $1.2 billion.

Kim Young-hee, head of the North Korea Economy Team at KDB, said an overwhelming portion of the budget goes toward the management and operation of the People's Armed Forces. The budget could also be greater than estimated if it accounts for the development of nuclear weapons and ballistic missiles, Kim said.

Lim Eul-chul of the Institute for Far Eastern Studies at Kyungnam University said the North could be hiding costs in other parts of the budget.

"The total budget is similar in size to last year's, but the portion devoted to military expenditures should be on the rise," Lim said.

The analysts expect the budget to grow in the future because North Korea is forecasting positive economic growth in the year ahead.

An increase in budgeted funds for cultural expenditures also indicates more renovation projects are being planned, and monuments to Kim idolization are being accounted for, Kim Young-hee said.

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