Transition Committee: "Supplementary Budget Funds Directly Target Moon Administration's 'Carbon Neutrality Budget'"

Budget Restructuring Targets 11.4 Trillion KRW for Carbon Neutrality and 33.1 Trillion KRW for New Deal
Funds for Self-Employed Compensation Secured...Ruling and Opposition Parties Reach Consensus, 'April Supplementary Budget' Possible

[Asia Economy Reporters Hyunju Lee and Gimin Lee] Following President-elect Yoon Seok-yeol's public announcement of the need for a second supplementary budget, the Presidential Transition Committee is seriously considering utilizing the government's carbon neutrality budget, which exceeds 11 trillion won this year, as a source for the supplementary budget. Alongside the Korean New Deal, a current administration project, carbon neutrality has been selected as a target for budget restructuring. However, since budget restructuring is the responsibility of the current administration, it is expected to be detailed after the new government takes office.

An official from the transition committee stated on the 23rd, "There are discussions within the committee that the mid- to long-term carbon neutrality response budget is excessively large," adding, "While it is clear that carbon emissions must be reduced by 40% by 2030, it is necessary to adjust the budget in areas that are unnecessary or non-urgent."

The carbon neutrality budget in this year's main budget, which passed the National Assembly last year, amounts to a total of 11.4 trillion won. Of this, 7.9 trillion won is allocated to decarbonizing the economic structure, including energy, industrial structure, and mobility such as the distribution of eco-friendly vehicles, and 2.5 trillion won is allocated to items establishing institutional foundations such as the climate response fund.

The transition committee is reviewing how much of the carbon neutrality-related budget is dedicated to mid- to long-term projects. The Moon Jae-in administration announced a greenhouse gas reduction target to cut emissions by 40% compared to 2018 by 2030 and reflected various projects to implement this in the budget. The transition committee believes that since President-elect Yoon has declared the cancellation of the nuclear phase-out policy, there will be factors to reduce the budget in the mid- to long-term process of achieving greenhouse gas reduction goals. By operating nuclear power plants to improve energy efficiency and reduce carbon emissions, investments in renewable energy and energy storage-related budgets can be distributed over the long term.

Budget restructuring for the Korean New Deal 2.0 projects is expected to accelerate. Since concerns have been raised about the feasibility of the New Deal projects themselves, they have been prioritized for budget restructuring by the transition committee. The Korean New Deal project budget this year is 33.1 trillion won, an increase of 12 trillion won from last year. Of this, 9 trillion won is allocated to the Digital New Deal projects, 12.7 trillion won to Green New Deal projects such as infrastructure green transition and green industry promotion, and 11.4 trillion won to Human New Deal projects including youth asset and housing support.

The National Assembly Budget Office pointed out regarding the Digital New Deal sector, "Some projects started on a small scale below the preliminary feasibility study threshold at the time of project initiation, but as support volumes have greatly increased according to policy directions, the budget scale has also expanded significantly, necessitating a review of appropriateness and validity."

The transition committee plans to pursue budget restructuring based on the 50 trillion won figure proposed by President-elect Yoon. The government allocated 16.9 trillion won last month as a supplementary budget to provide 3 million won in quarantine support funds this year. To provide the approximately 10 million won support promised by the People Power Party during the presidential election, at least 34 trillion won is required. An official from the transition committee said, "Whether to prepare a separate 50 trillion won supplementary budget or to secure 33 trillion won considering the amount provided in the first supplementary budget will be decided based on recent circumstances."

Since the ruling and opposition parties have already formed a consensus on preparing the supplementary budget, an "April supplementary budget" could be possible as early as now. Kim Ki-hyun, floor leader of the People Power Party, said on a radio program that day, "The government's compensation system for self-employed small business owners is very insufficient and should not be a simple benefit or charity but a fundamental compensation issue," adding, "The government restricted and interfered with business operations, so it must take responsibility for those who complied accordingly." Yoon Ho-jung, emergency committee chairman of the Democratic Party of Korea, also emphasized at a meeting that day, "Since the ruling and opposition parties have agreed, we must start immediately. The process of securing funds and proceeding swiftly to fully compensate must be carried out."

On the same day afternoon, Ahn Cheol-soo, head of the transition committee, announced that the COVID-19 Emergency Response Special Committee's Livelihood Economy TF meeting would discuss compensation for losses of small business owners and others. Choi Sang-mok, secretary of the transition committee's first economic division, is expected to focus on discussions related to the supplementary budget after receiving a briefing on Ministry of Economy and Finance affairs on the 24th.

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