[2023 Budget Plan] '24 Trillion' Record-Breaking Expenditure Restructuring... How?

[Asia Economy Sejong=Reporter Son Seonhee] While drafting next year's budget, the government reduced existing expenditures totaling 24 trillion won and redistributed them to other uses. Notably, it normalized spending that had been temporarily increased over the past two years to respond to the COVID-19 pandemic, and cut budgets for Korean New Deal projects such as jobs, solar power, and hydrogen, which were promoted under the Moon Jae-in administration. The budget for local currency was also completely eliminated.

According to the '2023 Budget Proposal' announced by the Ministry of Economy and Finance on the 30th, the scale of expenditure restructuring for next year is 24 trillion won. Considering that annual expenditure adjustments typically hovered around 10 trillion won, this is more than double that amount. Beyond simply streamlining projects with low execution rates or overlapping functions, the government actively cut budgets for projects criticized for going beyond the role of fiscal policy under the theme of 'strengthening private sector capabilities and public sector efficiency.' However, the Ministry of Economy and Finance did not disclose detailed information on the expenditure adjustments.

The largest expenditure restructuring was in the COVID-19 related budget, which was reduced by approximately 7 trillion won. Preventive-related budgets, including vaccine purchase costs, were cut by about 2.4 trillion won. Additionally, the entire 2.5 trillion won budget for small business loss compensation was eliminated and not reflected in next year's budget. However, if losses due to quarantine measures arise from a resurgence of COVID-19, additional spending through contingency funds or supplementary budgets is expected to be unavoidable.

The job creation budget of 2 trillion won and the startup support budget of 230 billion won, which had received large-scale fiscal input during the Moon administration, were also cut. Furthermore, New Deal-related projects such as solar power and hydrogen promoted by the previous government were also reduced.

The local currency budget, which was about 700 billion won this year, was completely cut. Local currency, typically sold at a 10% discount, had been subsidized with 4% of the discount borne by the government and the remaining 6% by local governments. Kim Wan-seop, Director of the Budget Office at the Ministry of Economy and Finance, explained the background, saying, "The effect of the local love gift certificates is limited to the region, making it a purely local project, which has led to various opinions on its policy effectiveness. Now that local markets and consumption are recovering, the government's priority is to use large-scale resources to support low-income and vulnerable groups rather than injecting them into that area."

The government also consolidated 81 organizations (48 merged and 33 abolished) out of 246 government committees funded by the budget, focusing on those with low performance, thereby reducing unnecessary expenditures. However, the scale of public sector expenditure restructuring was about 100 billion won, contributing only 0.4% to the total.

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