The 3rd Supplementary Budget May Exceed 30 Trillion Won... Expenditure Restructuring and Deficit Bond Issuance

Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, is briefing on the contents of the '5th Emergency Economic Measures Meeting' chaired by President Moon Jae-in at the Government Seoul Office in Jongno-gu, Seoul on the 22nd. Photo by Kim Hyun-min kimhyun81@

[Asia Economy Reporter Jang Sehee] The scale of the third supplementary budget (supplementary budget) is expected to approach 30 trillion won. As the COVID-19 pandemic prolongs, the size of the supplementary budget is also increasing.

According to related ministries on the 3rd, the Ministry of Economy and Finance has begun work on the second half economic policy direction to be announced in early June and the preparation of the third supplementary budget.

The third supplementary budget is expected to include 9.3 trillion won from the special employment stability measures fund, financial reinforcement from corporate stabilization measures, and revised revenue estimates. The required funds will likely be secured through deficit bond issuance and expenditure restructuring.

With the readjustment of revised revenue estimates in the third supplementary budget, the scale of government bond issuance is also expected to increase. Kim Yong-beom, the first vice minister of the Ministry of Economy and Finance, said on the 29th of last month, "The issuance of government bonds for the third supplementary budget is expected to be larger than that of the second supplementary budget."

Especially reflecting the expectation that this year's nominal growth rate will drop significantly, the revised revenue amount is expected to increase further. Additionally, the budget for financial reinforcement measures and the Korean New Deal national projects to stimulate the economy must also be included.

Following the government's issuance of 10.3 trillion won in deficit bonds for the first supplementary budget, if an additional 3.4 trillion won in deficit bonds is issued for the second supplementary budget as agreed, the national debt will exceed 800 trillion won.

The government is also proceeding with expenditure restructuring. A government official said, "We plan to carry out restructuring work on projects expected to have unused funds due to COVID-19," adding, "Projects that cannot be executed within the year also need to be reviewed again."

However, since President Moon Jae-in is emphasizing the speed of the third supplementary budget for comprehensive measures to rebound domestic demand, there is also speculation that the timing of the supplementary budget preparation may be brought forward.

At the Cabinet meeting presided over at the Blue House on the 28th of last month, President Moon said, "From now on is the full-fledged economic crisis phase. We must not miss the third supplementary budget."

This content was produced with the assistance of AI translation services.