The Budget Battle Begins... The Biggest Issue in the 'Korean New Deal'

[Image source=Yonhap News]

[Asia Economy Reporter Kang Nahum] The ruling and opposition parties are set to begin full-scale deliberations on next year's government budget, totaling 555.8 trillion won. With over 11 trillion won added during the preliminary review by standing committees, whether to cut the budget related to the 'Korean New Deal' project is expected to be the biggest point of contention.

The National Assembly's Special Committee on Budget and Accounts held a budget adjustment subcommittee meeting on the 16th to conduct a thorough review of increases and decreases in the budget passed from each standing committee. As in previous years, budget increases continued during the standing committee review process this year as well. Among the 17 standing committees, preliminary reviews were completed for 12, resulting in a total increase of 11.4 trillion won.

Among these, the Land, Infrastructure and Transport Committee recorded the largest net increase, adding 2.4 trillion won during the preliminary review. The largest increase was in the Transportation Facilities Special Account, part of the social overhead capital (SOC) budget, which rose by 1.0739 trillion won, and 55.1 billion won was added to projects related to the government's national agenda of Saemangeum development. The design cost for the National Assembly Sejong Branch building, originally 1 billion won in the government proposal, was increased by 11.7 billion won.

The Agriculture, Food, Rural Affairs, Oceans and Fisheries Committee saw a total increase of 2.3 trillion won, including 201.6 billion won for customized farmland support and 170 billion won for contributions to the Agricultural and Fisheries Credit Guarantee Fund. The Industry, Trade, Energy, Small and Medium Business Committee also increased by 2.2 trillion won, including 130 billion won for trade insurance fund contributions and 114.4 billion won for the National Balanced Development Special Account. Additionally, the Foreign Affairs and Unification Committee newly included a 10 billion won budget for the National Peace Library, which was not in the government proposal.

With the largest-ever budget combined with populist spending aimed at next year's by-elections, there is a strong expectation that the focus of this budget subcommittee review will be on 'cuts.' On the same day, Joo Ho-young, floor leader of the People Power Party, said, "Although this is a special situation due to COVID-19, many major projects were increased by the ruling party during the standing committee preliminary review process, including projects that the government had not even planned," adding, "This is extremely undesirable in terms of national fiscal management."

In particular, whether to cut the budget for the Korean New Deal project is expected to be the biggest issue in this review. The budget alone amounts to 21.3 trillion won. The People Power Party is preparing for large-scale cuts, arguing that the Korean New Deal budget is unnecessary and excessive. On the other hand, the Democratic Party insists on approving the original budget, making a clash between the ruling and opposition parties inevitable. At the highest-level meeting on the same day, Leader Lee Nak-yeon emphasized, "To make the Korean New Deal successful, the budget must be fully supported. I believe the opposition will also cooperate in laying a solid foundation for our economy," and added, "I hope you keep in mind that cutting the Korean New Deal budget could weaken the foundation for economic leap after COVID-19."

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