Submission of 2nd Supplementary Budget This Week... Possibility of '3rd Supplementary Budget' for the First Time in 51 Years

7.1 Trillion Won Fully Covered by Restructuring

Supplementary Budget Deliberation for Responding to the Novel Coronavirus Infection (COVID-19). From left, Jo Jung-sik, Policy Committee Chairman of the Democratic Party of Korea, Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, Lee Nak-yeon, Chairman of the COVID-19 Disaster and Safety Countermeasures Committee, and Lee In-young, Floor Leader, are engaged in conversation. (Photo by Yonhap News)

[Asia Economy Reporter Kwangho Lee] The government is accelerating expenditure restructuring efforts to submit a supplementary budget (supplementary budget) worth 7.1 trillion won to the National Assembly to provide emergency disaster relief funds to the bottom 70% income group. The government aims to pass the supplementary budget in the National Assembly within April and distribute the emergency disaster relief funds before mid-May.

According to the government and political circles on the 5th, the Ministry of Economy and Finance plans to submit the second supplementary budget to the National Assembly as early as this week or by next week at the latest.

The timing of the supplementary budget submission will be finalized depending on the progress of the Ministry of Economy and Finance's expenditure restructuring work and the intergovernmental task force (TF) preparing the 'cutoff' criteria for high-asset owners related to the emergency disaster relief fund payment.

In particular, the government is focusing on raising the entire 7.1 trillion won through expenditure restructuring without issuing deficit bonds during the process of preparing the second supplementary budget.

Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, mentioned at the crisis management meeting on the 1st that "the required funds for the relief fund will be fully covered by adjusting the already approved budget for this year without issuing deficit bonds."

Previously, President Moon Jae-in also emphasized "a government expenditure restructuring that cuts to the bone" several times, pledging to promptly submit the second supplementary budget to the National Assembly.

The government has been accelerating restructuring efforts since last week, focusing on areas such as defense, medical benefits, environment, official development assistance (ODA), rural and fishing villages, and social overhead capital (SOC).

However, it is known that it is taking time because it is very difficult to get cooperation from each ministry for restructuring existing expenditure projects, and they are trying to cover 7.1 trillion won through restructuring.

The review of the second supplementary budget will take place after the general election. Therefore, depending on the election results, there is speculation that the scope and method of emergency disaster relief fund payments may be partially revised during the review process, or other urgent projects may be added, increasing the scale to around 10 trillion won.

Meanwhile, as the government decided to submit the second supplementary budget focusing on the 'urgency' of disaster relief fund payments, the atmosphere suggests that a third supplementary budget has already been confirmed. There is speculation that it could be as early as mid to late May. It would be the first time in 51 years since 1969 that three supplementary budgets are prepared in one year.

If the COVID-19 situation does not enter a stabilization phase, there is an analysis that voices calling for a 'fourth supplementary budget' may emerge.