The South Korean state-run companies markedly cut back on their spending after the government’s plan to normalize their operations

February 25, 2014 Leave a comment

S. Korean state-run companies tighten belt

Shin Hyun-gyu

2014.02.17 14:59:40

The South Korean state-run companies markedly cut back on their spending after the government’s plan to normalize their operations. Their earnings also posted steep rises on the back of utility rate hikes including electricity bill. 

The nation’s public firms executed 2.9 trillion won ($2.7 billion) or 5.8 percent of their 2014 budget in January, according to the Ministry of Strategy and Finance Sunday.
Meanwhile, central government bodies spent 22.7 trillion won or 9.1 percent of their total annual budget over the cited period. This means public firms spent half the amount of spending by central government bodies. The Korea Environmental Industry and Technology Institute posted the lowest 0.1 percent budget execution rate in January.
The Incheon Port Authority marked 0.2 percent budget execution rate, the Korea Rural Community Corporation and the Korea Energy Management Corporation, 0.5 percent, each.
As the government plan forced state-run companies to scale back spending, this will likely put small and mid-sized businesses and suppliers working with public firms in trouble.
Public firms reported higher-than-expected fourth quarter earnings as they cut back on their spending and utility rates were raised.

Filed under Macro Trends

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