North Korea Concealed National Defense Budget

Daily NK
Han Young Jin

North Korea Concealed National Defense Budget behind People’s Economic Expenses in the 60’s~’70’s.

A study was published on the North Korean authorities’ concealment of national defense expenditure.

The Research Institute of Social Sciences at the University of Ulsan reported a study conducted by Lee Dal Hee a professor of public policy at the university which outlined North Korea’s hidden national defense expenditures. Professor Lee claimed that part of North Korea’s national defense expenses had been concealed behind “commodities and production capital” of the people’s economic expenses.

It has been doubtful that the North Korea’s national defense expenditures revealed officially didn’t accord with expanded military forces in practice.

The study analyzed documents such as assembly proceedings by the North Korean People’s Committee in the 60’s and 70’s and a yearbook of North Korea. The study detected that “commodities and production capital” excluded from the People’s economic expenses were omitted from the official financial budget.

Though there are some difficulties in applying this analysis to the present time taking into account that the analysis was based on documents made 30-40 years ago, this study is significant considering that it may provide a clue to the mishaps of North Korea’s obscure national defense expenditures.

North Korea’s national expenditure is divided into major departments including the people’s economic expenses, social and cultural expenses, military expenses and administrative expenses.

On the agenda of the People’s economic expenses is “commodities and reserved production.” These expenses form part of the commodities and production capital which is used to acquire war materials and materials for national defense. Here, war materials indicate military supplies such as ammunitions and guns, whereas materials for national defense represent items such as oil and food used in the military.

Based on the cost of construction balance from the People’s economic expenditure from 1967~1971, the study analyzes that 30~40% of funds, in fact 5~8 hundred million won had been concealed from the official budget. At the time, 2.16 North Korea won was worth $1 according to an official fixed exchange rate.

This year, North Korea estimated its national budget to balance at 433.2 trillion won ($30.9bn, $1-141won). Further, North Korea estimated its national defense budget to make up 15.8% of the budget, quoting 68.47 trillion won ($489mn).


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