Annual Recurring Budget Review Controversy... "Standing Committee and Budget Committee Reviews Should Be Separated"

Actual Budget Committee Cuts 714.2 Billion Won... 'Blind Review' Subcommittee Cuts Fall Short of 1.1444 Trillion Won
"Budget Committee Should Handle Total Amount, Standing Committees Should Review by Project to Separate Budget Review Functions"

[Asia Economy Sejong=Reporter Kwon Haeyoung] It has been identified that more than one-fifth of the KRW 5.5 trillion cut from the 2022 government budget bill during the National Assembly’s review was reduced not by the standing committees or the Budget and Accounts Committee (BAC), but by the so-called 'small subcommittee'?a 'black box meeting' with no legal basis under the National Assembly Act and no minutes recorded. Additionally, there were 76 projects amounting to approximately KRW 940 billion that were not included in the government-submitted budget but were independently increased during the National Assembly’s review process. Criticism has arisen that the BAC, which should prevent wasteful spending of taxpayers’ money through meticulous budget review, has once again conducted a poor review. There are calls to separate the budget review functions, with the BAC handling total amounts and the standing committees reviewing by individual projects.

On the 1st, the Nara Salrim Research Institute analyzed the National Assembly’s budget cuts for 2022 and found that a total of KRW 5.5322 trillion was cut, of which KRW 1.681 trillion (30%) was cut by standing committees and KRW 2.7066 trillion (49%) by the BAC.

The amount cut by the small subcommittee without going through the standing committees or BAC review was identified as KRW 1.1444 trillion (21%). The small subcommittee is an unofficial body where the BAC’s budget adjustment subcommittee’s deferred projects and budgets are finally negotiated by the BAC’s floor leaders from both ruling and opposition parties. Although it is argued that operating the small subcommittee is inevitable to process the budget within the deadline, it is criticized every year as a 'closed-door budget approval' because a small group arbitrarily cuts budgets and inserts local constituency projects. In fact, 76 projects amounting to about KRW 940 billion, which were not in the government-submitted budget but were independently increased during the National Assembly’s review, were identified. This is effectively a 'black box increase' or 'closed-door increase' through the small subcommittee.

The Nara Salrim Research Institute stated, "The National Assembly’s budget review process is meant to reduce unnecessary project budgets and increase necessary ones to efficiently execute the budget. The cut review, which prevents government budget waste, is the greatest authority and responsibility granted to the National Assembly. However, cutting 21% of the total amount without review by standing committees or the BAC, and not even disclosing the reasons, shows that the BAC has not fulfilled its authority and responsibility," they pointed out.

Moreover, the projects actually cut by the BAC amounted to KRW 714.2 billion, which is much less than the KRW 1.1444 trillion cut by the small subcommittee, which has no legal basis.

The BAC cut KRW 2.7066 trillion, but 74% of this amount, KRW 1.9904 trillion, was reduced from projects under the jurisdiction of the Ministry of Economy and Finance. Most of this was contingency funds (KRW 1.1 trillion) and national bond interest repayments (KRW 760.2 billion), which are more like accounting adjustments rather than actual budget cuts. For example, in the case of national bond interest, payments must be made according to the fixed national bond interest rate regardless of the National Assembly’s cuts. Typically, the Ministry of Economy and Finance inflates the interest repayment budget, and the National Assembly reduces it, a practice that is repeated. This is effectively a 'trick' cut.

The institute said, "It can be interpreted that the BAC’s cut review was effectively poor," and pointed out, "It is desirable to separate the review functions of the standing committees and the BAC, with the standing committees reviewing project feasibility and individual project budgets, and the BAC reviewing the total fiscal volume and budget formulation direction."

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