Weekly Summary

Approved for Release: 2023/03/28 C03154550
Stow ECONOMIC GROWTH FRUSTRATES NORTH KOREANS
IT1
Despite intense pressures fro
Premier Kim Il—song, the North
Korean economy is not growing fast
enough to allow an increase in al-
ready high defense expenditures,
nor is it increasing the chances
of successfully winding up a plan
that has dragged on embarrassingly
into its tenth year.
Finance Minister Choe Yunsu,
in his budget message to the Su~
preme People's Assembly on 20
April, avoided output claims for
1969. His figures indicate that
revenue and expenditures fell even
further behind plans than is usual
for North Korea. Revenue increased
six percent instead of the 19 per-
cent planned, and expenditures
grew by five percent instead of
24. The disappointing performance
of the economy was attributed to
unfavorable weather conditions
and a cut in consumer—goods prices
Defense expenditures have
been the subject of intense propa-
ganda since 1966, particularly so
after the Pueblo and EC—l2l inci-
dents. Last year, Pyongyang
called for another step—up in
absolute defense spending, al-
though as a percentage of total
state revenues it was to remain
at the 30-31 percent in force
since 1966. Pyongyang did not
meet the l4—percent increase
planned for 1969, apparently be-
cause the share of funds devoted
to defense had already been near
the maximum supportable by the
economy. Defense spending is
planned to remain at 31 percent
of total expenditures in 1970,
but, on the basis of the planned
rate of budget growth, absolute
defense spending is expected to
rise by 23 percent.
Kim Il—song has insisted
that economic growth under a so-
cialist system can reach l5~20
percent annually, but the North
Korean economy in recent years
has been growing only at an esti—
mated four to five percent a year.This rate is less than half South
Korea's growth rate, a comparison
that North Korea finds extremely
disconcerting.
Economic development in North
Korea slowed considerably in the
middle l960s following Soviet ces-
sation of economic aid because of
Pyongyang's alignment with China
in the Sino—Soviet dispute. The
aid cut—off was one of the primary
reasons for failure of the orig-
inal l96l—67 plan. An extension
of the plan to 1970 was adopted
in order to gain more time to
achieve the more important goals.
The Soviet Union resumed
economic aid during 1968. About
30 million dollars was probably
drawn on credit that year and
another 30-40 million dollars is
estimated to have been provided
in 1969. Nevertheless, prospects
for achieving the major goals of
the current plan remain uncer-
tain. Pyongyang, however, no
doubt will proclaim success when
the plan nominally ends in Sep-
tember and a new five year plan
is promulgatedq
lhge 12 \VEEKIJ’SUAUL%RY 8 May 70
Approved for Release: 2023/03/28 C03154550
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