10% Discretionary Spending Cut by Ministry... Comprehensive Overhaul of Subsidies and Contributions

Ministry of Economy and Finance Finalizes and Distributes Detailed Guidelines for 2021 Budget Formulation

[Asia Economy Reporter Kwangho Lee] The government plans to restructure discretionary spending by about 10% for each ministry in next year's budget formulation and to comprehensively reorganize subsidies, grants, and investments that have diminishing effects.

The Ministry of Economy and Finance announced on the 6th that it finalized and notified each ministry of the "Detailed Guidelines for the Formulation of the 2021 Budget and Fund Operation Plan" following the announcement of the "Budget Formulation Guidelines" on March 24 for the 2021 budget formulation. Each ministry must prepare their budget requests according to the finalized guidelines and submit them to the Ministry of Economy and Finance by the 31st of this month.

The formulation guidelines reflect the goals of next year's budget and provide overall direction. The detailed formulation guidelines include explanations of project types and cost items as well as various standard unit prices, serving as reference materials for budget officers in each ministry when preparing budget requests.

The main changes in these guidelines are ▲ securing new investment capacity through expenditure restructuring ▲ rationalizing intellectual service fees ▲ strengthening management of new projects and budget items.

First, bold expenditure restructuring will be pursued to maximize the securing of new investment capacity.

While revenue conditions have worsened due to the economic downturn caused by the novel coronavirus disease (COVID-19), fiscal demands for overcoming the crisis, revitalizing the economy after COVID-19, and securing new growth engines are rapidly increasing. Accordingly, each ministry will restructure about 10% of discretionary spending and also promote institutional improvements in mandatory spending to strengthen efficient resource allocation. This time, the saved resources will be reinvested in new and core projects to actively encourage voluntary restructuring by ministries.

As part of intensive expenditure restructuring, subsidies and grants will be reorganized. The necessity and support scale of about 600 projects that have received support for over three years will be reexamined. Standards for reorganizing about 500 institutional operation grants and project grants will be established to consider consolidation and expenditure efficiency.

The government also plans to rationalize fees for intellectual services such as design and planning, thereby promoting the growth of related intellectual service industries.

It will establish grounds to additionally reflect planning design fees within 10% of architectural industry design fees and subdivide construction and telecommunications works into 4 to 5 types according to the characteristics and difficulty of the work to provide differentiated design fee support. Furthermore, when promoting new informatization projects, cloud usage will be prioritized before separate server construction, and pre-procedures will be strengthened.

Additionally, for new exhibition cultural facility projects such as museums, art galleries, and memorial halls, pre-feasibility evaluations will be conducted to strengthen pre-inspection procedures before budget requests.

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