Welfare and Employment at 200 Trillion Won... Main Budget May Exceed 550 Trillion Won

After passing the National Assembly, super-expansion budget expected... "Concerns over fiscal soundness... rough road anticipated"

[Asia Economy Reporter Kwangho Lee] On the 12th, the expenditure plan requested by each government ministry for next year amounts to 542.9 trillion won, a 6.0% increase compared to this year, but it is highly likely to be revised during the National Assembly's deliberation process. Last year, the total expenditure scale of the budget and funds requested by each ministry for this year was 498.7 trillion won (growth rate 6.2%), but after passing through the party and government and the National Assembly plenary session, the final budget was confirmed at 512.3 trillion won (growth rate 9.1%).

In particular, since the political circles are continuously demanding expansionary fiscal policies to overcome the COVID-19 crisis, there is speculation that an ultra-expansionary budget will be formulated next year as well. In this case, there is a possibility that next year's budget will exceed 550 trillion won. Each ministry also requested increases centered on the Korean New Deal to lead the post-COVID era. However, there are ongoing criticisms that maintaining expansionary fiscal policies amid economic downturn and declining corporate performance leading to reduced tax revenue is "not desirable from the perspective of fiscal soundness."

A government official said, "Difficulties are expected until the final plan (for next year's budget) is confirmed through consultations with the party and government, standing committees, and government ministries," and refrained from further comment.

Among the budget expenditure proposals submitted by each ministry, the notable area is the health, welfare, and employment budget, which approaches 200 trillion won. To strengthen the employment safety net such as the full-scale implementation of the National Employment Support System, new technology vocational training, expansion of social safety nets such as basic pensions and basic living security, and advancement of K-quarantine, 198 trillion won was requested, a 9.7% increase. The National Employment Support System, a Korean-style unemployment assistance system, is a national agenda of the Moon Jae-in administration. On the 9th, President Moon presided over a Cabinet meeting and urged, "Please ensure thorough implementation of the National Employment Support System," and "Make efforts to further develop the system so that it can play a substantial role as an unemployment assistance system."

Additionally, 26.5 trillion won was requested for the research and development (R&D) sector, a 9.4% increase. This is due to the full-scale promotion of supply stabilization for 100 major items of materials, parts, and equipment, basic research, and fostering of DNA (Data, Network, AI) + BIG3 (future cars, system semiconductors, bio-health) sectors.

Due to the promotion of the Korean New Deal, the requested amounts for the industry, small and medium enterprises (SMEs), and energy sectors showed double-digit growth compared to this year's budget. For the industry, SMEs, and energy sectors, 26.6 trillion won was requested, a 12.2% increase compared to this year, to activate startups and ventures in digital and non-face-to-face industries due to the Korean New Deal, support management stability and growth of SMEs and small business owners, and promote renewable energy. The environment sector also requested 9 trillion won, a 7.1% increase, focusing on eco-friendly Green New Deal initiatives such as greenhouse gas reduction, smart local water supply safety management, and green industries.

A Ministry of Economy and Finance official stated, "We plan to compile the budget by comprehensively considering next year's economic situation, revenue and expenditure needs, and reflecting additional requests due to changes in policy conditions after receiving requests such as the establishment of the Korean New Deal comprehensive plan." Furthermore, "We plan to significantly improve the productivity of fiscal expenditures by reinvesting resources secured through a 10% structural adjustment of discretionary spending, excluding essential needs such as national agendas, into core tasks such as the Korean New Deal and inter-ministerial collaborative projects."

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