[Asia Economy Reporter Wondara] Ahead of the review of next year's budget bill, the ruling and opposition parties engaged in a tense exchange over the scale of budget cuts. The Democratic Party emphasized the need for expansionary fiscal policy, while the People Power Party argued that more than 15 trillion won should be cut.
Park Hong-geun, a Democratic Party lawmaker serving as the ruling party's secretary on the National Assembly's Budget and Accounts Committee, attended the 2021 budget bill discussion held at the National Assembly on the afternoon of the 28th and said, "Although national debt has increased to 47.1% of GDP, it is a better choice to endure temporary debt increases and faithfully fulfill the fiscal role of responding to the economy to save businesses and protect employment."
He added, "The increase in national debt during the COVID-19 crisis is a global phenomenon," emphasizing, "The debt ratio of OECD countries is around 110%, and Korea's is relatively favorable at 40%."
Park also stressed, "Next year's budget should strengthen fiscal support focused on four major investments," highlighting the importance of the Korean New Deal project. The budget for the Korean New Deal project in next year's budget bill is 21.3 trillion won, with 7.9 trillion won allocated to the Digital New Deal, 8 trillion won to the Green New Deal, and 5.4 trillion won to strengthening the safety net.
He also emphasized the importance of the welfare sector budget. Park said, "The welfare sector's growth rate has been in double digits for four consecutive years (10.7% next year), and for the first time ever, about 200 trillion won will be invested in welfare to support innovative inclusive national policies."
The People Power Party announced plans to drastically cut next year's budget. Chu Kyung-ho, a People Power Party lawmaker serving as the party's secretary on the Budget and Accounts Committee, said, "It is necessary to cut at least 50% of the Korean New Deal budget and fully reallocate it to COVID-19 response budgets such as customized disaster relief."
People Power Party lawmakers on the Budget and Accounts Committee also held a press conference that day, stating, "We will reduce the budget by at least 15 trillion won." They identified the following items for cuts: ▲6 billion won for the Financial Services Commission's New Deal Fund project budget (due to poor existing fund investment performance), ▲3.79 billion won for the Ministry of Trade, Industry and Energy's renewable energy project budget (due to halving of solar power sales prices and side effects such as forest damage), ▲5.785 billion won for the Ministry of Land, Infrastructure and Transport's advanced road traffic system project budget (concerns over unexecuted budget), and ▲745 million won for the Ministry of Science and ICT's digital divide resolution project budget (Digital New Deal education and promotion budget).
Meanwhile, the National Assembly will begin preliminary budget review from this day. The legal deadline for processing next year's budget bill, which is organized at 555.8 trillion won, is December 2.
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