Government Hesitates on Dormant 3rd Supplementary Budget... Opposition Says "Project Plans Are Inadequate and Require Verification"

Government Urges Swift Approval of 3rd Supplementary Budget
"Budget for Jobs, Businesses, Korean New Deal, and Quarantine"
Opposition Says "Revenue Estimates Are Inaccurate and Project Budgets Should Be Cut"

[Sejong=Asia Economy reporters Kim Hyunjung and Jang Sehee] The Blue House, government, and ruling party are repeatedly urging the National Assembly for the swift review and passage of the third supplementary budget (supplementary budget) worth 35.3 trillion won, urgently allocated to respond to the novel coronavirus infection (COVID-19) crisis. As the spread of COVID-19 is leading to a second wave, the need for rapid fiscal injection is growing. However, difficulties are expected during the review process even after overcoming the hurdle of organizing the National Assembly. The opposition party has announced a sharp review, pointing out numerous weak points in the supplementary budget, and some voices are calling for thorough verification of revenue revisions and the budget for the Korean New Deal projects.

◆"Third supplementary budget hastily allocated," opposition party announces piercing review= On the morning of the 23rd, An Euihwan, the 2nd Vice Minister of Strategy and Finance, chaired the pan-government supplementary budget task force (TF) meeting and the 11th emergency fiscal management inspection meeting held at the Government Complex Sejong, requesting the prompt processing of the third supplementary budget submitted to the National Assembly on the 4th. Vice Minister An emphasized, "The passage of the third supplementary budget is essential so that 580,000 workers at companies facing temporary management difficulties do not lose their jobs and can receive leave and furlough allowances," adding, "The existing budget may be exhausted by July, making the passage of the supplementary budget even more urgent." He continued, "This supplementary budget is for overcoming the crisis faced by companies struggling with liquidity, supporting local commercial districts, the Korean New Deal, and for quarantine budgets to prevent the spread of COVID-19," stressing, "We urgently need the cooperation of the National Assembly to ensure it is processed within June without missing the golden time."

However, the United Future Party, opposing the ruling Democratic Party's monopolization of standing committee chairmanships, criticizes some third supplementary budget projects as "hastily allocated" and demands budget cuts for certain projects. While organizing the National Assembly is challenging, it is said that swift review and passage afterward may also be difficult. In particular, opposition lawmakers who previously served as the 2nd Vice Minister of Strategy and Finance argue that the revenue revision (supplementing expected tax shortfalls) is insufficient and, considering that this supplementary budget was prepared to respond to the COVID-19 national crisis, budgets allocated for projects after this year are unnecessary. Song Eon-seok, a United Future Party lawmaker, said, "The government included 11.4 trillion won in the third supplementary budget for revenue revision, but the tax shortfall is expected to be larger than anticipated," adding, "Ultimately, additional government bonds will have to be issued." Regarding the New Deal projects, he explained, "The New Deal feels hastily put together. Each project's nature should be examined to determine whether it can be executed."

Ryu Seong-geol, from the same party, also said, "The scale of the revenue revision is too small," adding, "It is fundamentally important to see how the three major taxes?corporate tax, income tax, and value-added tax?are doing." Corporate tax decreased by 3.2 trillion won compared to the previous year from January to April, and value-added tax also decreased by 3.7 trillion won during the same period. In fact, the National Assembly Budget Office predicted a tax revenue shortfall of 14.4 trillion won, which is 2 trillion won larger than the government's proposal. He also said, "We will examine whether the New Deal budget was prepared at a level that allows project execution."

◆National Assembly Budget Office also points out deficient projects= The '3rd supplementary budget analysis' report published by the National Assembly Budget Office on the 23rd also points out deficiencies throughout the project plans. In particular, it sees the 'Korean New Deal' project, which was first proposed on April 22 and materialized into a supplementary budget after 43 days, as needing prompt supplementation.

Representative examples include the Ministry of Science and ICT's 'AI Voucher Support (331.5 billion won)' project and the 'Big Data Platform and Network Construction (85.9 billion won)' project. The Budget Office diagnosed these as having 'uncertain project effects.' Specifically, "The AI Voucher Support project cannot verify the quality of solutions provided by supplier companies or the business performance and effects of recipient companies, and the timing of voucher cost settlement is unpredictable. It is necessary to review whether it is appropriate to rapidly expand the project scale to more than 15 times the original budget," and "Regarding the Big Data Platform project, the government has not even decided which field's platform to newly build," it pointed out.

Additionally, it criticized the Ministry of SMEs and Startups' 'Green New Deal Promising Company Development (5.2 billion won)' project for failing to finalize detailed criteria for selecting support targets, which is the most important matter. Regarding the Ministry of Environment's 'Renewable Energy Financial Support (fund contribution of 20 billion won),' it pointed out, "The budget was prepared assuming potential installation capacity, but the specific project plan is insufficient." Concerning the Ministry of Health and Welfare's 'Support for Installation and Operation of Respiratory Dedicated Clinics (50 billion won)' project, it also noted, "Medical institutions must bear economic losses to participate in the project, yet there is no separate plan for incentives."