Focus on Resolving Polarization in 2nd Supplementary Budget... Is a 30 Trillion 'Super Supplementary Budget' Coming?

Government Prepares Vaccine, Domestic Demand, and Employment Measures... Ruling Party Demands Nationwide Disaster Relief Fund

[Asia Economy Reporter Jang Sehee] The Ministry of Economy and Finance has officially confirmed the formulation of the second supplementary budget (supplementary budget), with the scale expected to exceed at least 19 trillion won. If the nationwide disaster relief fund advocated by the Democratic Party of Korea is included, it is not impossible for the amount to exceed 30 trillion won.

According to the ruling party and government on the 5th, the Ministry of Economy and Finance has begun work on the second supplementary budget. The direction of this supplementary budget focuses on revitalizing domestic demand, employment, small business owners, and quarantine measures. In particular, it plans to focus on resolving the polarization caused by COVID-19.

A government official emphasized, "There is a possibility of additional support for industries such as tourism, which were severely affected by COVID-19," adding, "In addition, reinforcement work on youth jobs and housing policies will also be carried out."

Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, stated at the 'Meeting with Heads of Research Institutes and Investment Bank Experts' on the 4th, "We will consider additional fiscal reinforcement measures, that is, the formulation of the second supplementary budget, to support a complete economic recovery accompanied by employment recovery and strengthened inclusiveness this year."

This is interpreted as a follow-up measure to President Moon Jae-in's directive to consider the formulation of a supplementary budget using excess tax revenue. Earlier, on the 27th of last month, President Moon ordered at the Fiscal Strategy Meeting that "the possibility of additional fiscal input should be kept open."

However, the funding is expected to avoid controversy over fiscal soundness by utilizing additional tax revenue. Deputy Prime Minister Hong emphasized, "A significant portion of additional tax revenue is expected due to different economic recovery conditions from the original tax revenue forecast, additional tax revenue from the asset market sector, and an increase in contingent tax revenue," adding, "The funding for the supplementary budget will basically utilize this without issuing additional deficit bonds."

In fact, according to the Ministry of Economy and Finance, the government collected 88.5 trillion won in taxes in the first quarter (January to March) of this year. This is an increase of 19 trillion won compared to the first quarter of last year, marking an all-time high. This is also the first time that first-quarter tax revenue has exceeded 80 trillion won. Several factors overlapped, including faster-than-expected economic recovery, strong exports, and increased real estate-related taxes.

Meanwhile, the supplementary budget plan is expected to be disclosed through the announcement of the second half economic policy direction scheduled for the end of this month. Deputy Prime Minister Hong added, "It should contain specific policy prescriptions and policy tasks to achieve the goal of a fast and strong recovery of our economy in the second half."

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