During US Visit, President Yoon Faces Budget 'At Risk of Being Lost' Amid 'That XX Slang' Controversy (Comprehensive)

President Yoon's Budget Promise at Last Month's September Global Fund Financial Pledge Meeting
Government Allocates New General Account Project Despite Existing Funds Due to Resource Shortage
Budget Policy Office's Analysis Report Criticizes Allocation Method
Need to Utilize General Account Transfers Rather Than New Projects

President Yoon Suk-yeol is speaking at the 7th Global Fund Replenishment Conference held in a building in New York, USA, on the 21st (local time). [Image source=Yonhap News]

[Asia Economy Reporter Naju-seok] The budget related to the ‘Global Fund’ promised by President Yoon Suk-yeol during his visit to the United States has been stalled at the initial stage of the National Assembly’s review. This is the budget that sparked controversy due to President Yoon’s use of ‘vulgar language’ directed at the National Assembly.

According to the National Assembly Budget Office’s analysis of next year’s budget on the 2nd, the government has prepared a budget of 100 billion KRW as a new project under the name of the Global Health Contribution Project for next year. The Budget Office pointed out regarding this project, "The newly allocated Global Health Contribution Project is partially transferred from the International Disease Eradication Fund to the general account due to a shortage of funds in the said fund, which does not align with the purpose of the fund’s establishment and makes performance management difficult. Therefore, it is necessary to maintain the project as a fund project by utilizing transfers from the general account."

This project was the budget promised by President Yoon at the 7th Global Fund Financial Pledge Meeting on September 22. At that time, as President Yoon was leaving the meeting room, he said, “What if these XX in the National Assembly don’t approve it? Won’t Biden be embarrassed?” which caused controversy. Later, Kim Eun-hye, the Chief of Public Relations, explained in a briefing that the concern was directed at the opposition party and the National Assembly, not the U.S. Congress. According to Kim’s explanation, President Yoon’s remark meant, “What if these XX in the National Assembly don’t approve and kill it? Won’t it be embarrassing?” It implied that if the National Assembly, especially the majority opposition party, the Democratic Party of Korea, does not handle the project, it would be embarrassing for the President. Subsequently, during the verification process at the Presidential Office, President Yoon stated that he “finds it difficult to recall” the remark, which further fueled controversy over whether vulgar language was used.

The problem is that what the President worried about at the time has partly become a reality. This is because the National Assembly Budget Office raised issues regarding the method of budget allocation.

The Budget Office’s budget analysis report is one of the main reference materials for lawmakers when reviewing the budget, along with the preliminary review report from the relevant standing committee. This year, the Budget Office was the first to point out this project among the Ministry of Foreign Affairs’ individual projects, and the issue was about the method of budget allocation.

Originally, South Korea has operated the International Disease Eradication Fund to eradicate diseases through global vaccine development and distribution, supporting international organizations such as the United Nations Conference on Trade and Development (UNCTAD) and the Coalition for Epidemic Preparedness Innovations (CEPI). The main source of income for this fund (over 90%) is the departure tax, known as the departure fee. The problem is that while the departure fee collected was 41 billion KRW in 2019, it sharply declined to 1.3 billion KRW last year due to a drastic drop in travelers caused by COVID-19 and other factors, reducing the fund’s resources. The Ministry of Foreign Affairs explains that some of the fund’s projects were transferred to the general account due to the decrease in fund resources.

During his visit to the U.S., President Yoon pledged to contribute 100 million USD over the next three years. Accordingly, 50 million USD was allocated for next year’s budget, and thereafter, 25 million USD will be contributed annually.

Accordingly, this year, 19.2 billion KRW was allocated to the Global Fund, 11.3 billion KRW to UNCTAD, 11.3 billion KRW to the Global Alliance for Vaccines and Immunization (GAVI), and 6.7 billion KRW to CEPI. Currently, all budgets are funded through the International Disease Eradication Fund, but next year, projects will be conducted not only through the fund but also through the general account, making the project more complex. For example, in the case of the Global Fund, 9.7 billion KRW will be funded from the fund and 64.5 billion KRW from the general account. The Global Fund will receive funding from both the fund and the budget.

The Budget Office stated, "Classifying and allocating projects that have been supported according to the fund’s establishment purpose into the general account and the fund due to a lack of resources makes it difficult to track project progress and manage performance." It also said, "Paying specific contributions to the same international organization through different sources of funds increases the complexity of financial management," and "Instead of separating the funds, it is more efficient to temporarily use transfers from the general account to support the fund’s projects."

A fiscal expert expressed skepticism about the agreement of the Ministry of Strategy and Finance, noting that while the Ministry of Foreign Affairs and others may prefer to have separate accounts rather than their own funds, it is questionable that the Ministry of Strategy and Finance, which acts as the gatekeeper of the budget, did not filter this out. Lee Sang-min, Senior Research Fellow at the National Fiscal Research Institute, said, "It is natural for the Ministry of Foreign Affairs to want to secure resources through the general account rather than its own fund, just like it is better to buy a soccer ball with your mother’s money than your own," but added, "It is questionable that the Ministry of Strategy and Finance, which plays the role of the budget gatekeeper, did not catch this."

However, the National Assembly’s Foreign Affairs and Unification Committee expressed a positive stance on budget allocation through the general account in its preliminary review report. Considering the difficult conditions such as loans from the Public Fund Management Fund or raising the departure fee, it is deemed desirable to allocate the budget as a contribution.

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