Yoon's Side Pressures Government for Supplementary Budget: "Budget Restructuring Is a Matter of Will"

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[Asia Economy Reporter Ki-min Lee] The Presidential Transition Committee has expressed the position that the issue of the second supplementary budget currently under discussion is a matter of the government's will. It is expected that the supplementary budget will be created while reviewing the process of selecting national tasks, and the outline of the supplementary budget scale will be revealed around mid-next month.

A key official of the Transition Committee said on the 31st, "The supplementary budget for COVID-19 will be determined according to the direction of the national task selection process," adding, "The formation of the supplementary budget is a matter of government will." This was aimed at the government's reluctance regarding expenditure restructuring. It is expected that the additional COVID-19 supplementary budget will be finalized around mid-next month, when the first national promotion tasks of the Transition Committee are selected.

Earlier, President-elect Yoon Seok-yeol pledged during the presidential election to secure 50 trillion won through a supplementary budget to compensate for losses of small business owners and self-employed people due to COVID-19. The current ruling party, including the Democratic Party, has consistently pointed out that President-elect Yoon's statement about securing funds through expenditure restructuring without issuing deficit bonds is unrealistic. However, the Transition Committee is reportedly discussing with the Ministry of Economy and Finance a plan to minimize deficit bond issuance by cutting unnecessary projects to prepare the supplementary budget funds.

Accordingly, the Transition Committee is estimating the loss scale of self-employed and small business owners while reviewing some carbon-neutral projects excluding defense and personnel expenses from the existing budget, as well as Korean New Deal 2.0 projects, as priority candidates for adjustment. For example, among the carbon-neutral projects (11.4 trillion won), the economic structure decarbonization project (7.9 trillion won), which changes the energy structure through eco-friendly power generation, is likely to see budget cuts since both former President Moon Jae-in and President-elect Yoon agreed that maintaining the nuclear phase-out policy is difficult.

Korean New Deal 2.0 (33.1 trillion won), which is condensed into Digital New Deal, Green New Deal, and Regional Balanced New Deal, also has room for adjustment as the total project cost from 2020 to 2025 is 220 trillion won (180 trillion won from national funds). In particular, the Green New Deal policy overlaps with some carbon-neutral projects, and the Regional Balanced New Deal budget has been criticized for being used for existing social overhead capital (SOC) projects, contrary to the original intention of discovering projects linked to Digital and Green New Deals. Moreover, about 3.4 trillion won from taxes collected more than expected last year can be used as supplementary budget funds.

The Ministry of Economy and Finance's shift to a tightening stance to reduce government spending is also giving momentum to the Transition Committee's preparation of the COVID-19 supplementary budget. According to the 2023 budget formulation guidelines and fund operation plans passed at the recent Cabinet meeting, government spending will be reduced to the 2019 level, and fiscal expenditure will be restructured to cut stagnant national projects by 10-15%. Additionally, among the 607.7 trillion won budget this year, a 10% reduction of the 303 trillion won discretionary spending, securing new resources, strengthening fiscal management, and implementing open finance are planned to accelerate mid- to long-term fiscal soundness.

There is also interest in the timing of the passage of the Transition Committee's supplementary budget. If the supplementary budget is submitted to the National Assembly around mid-next month, its passage is expected around the June 1 local elections. The average time from submission to passage of the first supplementary budget of past governments from Kim Young-sam to Moon Jae-in was 42 days. The first supplementary budget of the Lee Myung-bak government to overcome high oil prices was submitted on June 20, 2008, but due to the delayed opening of the National Assembly caused by the mad cow disease controversy and candlelight protests, it took 90 days to pass. Except for this case, it usually took about 30 days, so it is expected that the supplementary budget could pass around the time of President-elect Yoon's inauguration at the earliest.

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