[2022 Budget Guidelines] Next Year's Budget Expected to Approach 600 Trillion Won... Increased by 200 Trillion Won in 5 Years Since Moon Government Inauguration

Cabinet Approval of Next Year's Budget Draft and Fund Operation Plan Guidelines
Maintaining Expansionary Fiscal Policy... "Finance to Lead Economic Vitality, Innovation, and Inclusive Investment"
Comprehensive Review of Temporary Increase Projects like Policy Finance and Employment Support... Expenditure Restructuring

Ando-geol, Director of the Budget Office at the Ministry of Economy and Finance, explaining the '2022 Budget Draft Preparation and Fund Operation Plan Guidelines.' (Photo by Ministry of Economy and Finance)

[Sejong=Asia Economy Reporter Moon Chaeseok] The government has announced its intention to maintain the existing expansionary fiscal policy next year. Although it plans to conduct a comprehensive review of projects temporarily increased to respond to the COVID-19 crisis, it is inevitable to increase expenditures to support economic recovery and respond to changes in the industrial structure. As a result, next year's budget expenditure is expected to approach 600 trillion won. The government approved and finalized the "2022 Budget Draft Preparation and Fund Operation Plan Guidelines" at the Cabinet meeting on the 30th. The preparation guidelines are a set of instructions from the Ministry of Economy and Finance to each ministry.

The four principles of this year's preparation guidelines are boosting economic vitality, future innovation investment, establishing a foundation for people's livelihood and inclusion, and ensuring public safety and quality of life. This means aiming to revive the economy without neglecting welfare. Andogul, Director of the Budget Office at the Ministry of Economy and Finance, stated, "The primary focus of investment is on comprehensive economic revitalization, with the utmost emphasis on turning employment and domestic demand positive. To firmly place our economy on a normal growth trajectory and to sustain innovation and inclusive investments necessary for becoming a leading nation, fiscal policy must continue to play a leading role."

With the government indicating it will maintain an expansionary fiscal stance, next year's government budget is expected to reach 600 trillion won. According to the "2020?2024 National Fiscal Management Plan" submitted to the National Assembly on September 1 last year, the total expenditure growth rate for next year is 6.0%. Adding this to this year's main budget of 558 trillion won results in 591.5 trillion won. Considering supplementary budgets issued for COVID-19 disaster relief payments, expenditures could increase further. Surpassing 600 trillion won would mark just two years after first exceeding 500 trillion won in 2020. Compared to the early days of the Moon Jae-in administration, the budget has surged by 200 trillion won. This is because even before the COVID-19 outbreak, expansionary fiscal policies focusing on welfare budgets were pursued.

For fiscal management, the government plans to conduct a comprehensive review of projects temporarily increased to respond to the COVID-19 crisis. While the preparation guidelines have previously reviewed low-justification expenditure projects, this is the first time that temporary expenditure projects have been specifically targeted for a full review and expenditure restructuring. Projects subject to review include policy finance projects such as funds increased to supply liquidity, employment support projects like employment retention support and employment incentives, and consumption recovery projects such as agricultural, fishery, cultural, and tourism vouchers, as well as local love and Onnuri gift certificates. A Ministry of Economy and Finance official said, "This is effectively the first time that the preparation guidelines have stated a comprehensive review of temporarily increased projects. Although there were more temporary projects than usual last year due to COVID-19, this means shifting expenditure structures from temporary projects to investment resources for the future."

Despite these guidelines, concerns about fiscal soundness are expected to grow. This is because the national debt forecast increased to 965.9 trillion won by the end of the year after issuing the first supplementary budget earlier this month to provide the fourth round of disaster relief payments. Regarding this, Director Andogul said, "We are in a situation where we must catch both rabbits of active fiscal management and total fiscal volume control."

Each ministry must submit their budget requests for next year to the Ministry of Economy and Finance by May 31 according to the preparation guidelines. Based on these, the Ministry plans to draft next year's budget and submit it to the National Assembly by September 2.

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