Entering preliminary review by standing committees after the President's policy speech... Budget subcommittee to operate on the 16th of next month
Opposition claims "10 trillion cut in Korean New Deal budget," ruling party opposes as "refusal to overcome crisis"
Disagreements on fiscal soundness expected to cause review difficulties
[Asia Economy Reporter Kim Hye-min] On the 29th, the day after President Moon Jae-in's policy speech, the National Assembly officially began reviewing next year's budget, totaling 556 trillion won.
While both ruling and opposition parties agree that the budget is crucial to overcoming the novel coronavirus disease (COVID-19) crisis, there are clear disagreements on specific projects. In particular, the key issue is how much the opposition's demand for significant cuts to the budget related to the government's core initiative, the "Korean New Deal," will be reflected. This is expected to cause friction during the review process.
On the morning of the same day, the standing committees began preliminary reviews sequentially, starting with the Industry, Trade, Energy, Small and Medium Enterprises Committee's budget proposal. The Special Committee on Budget and Accounts plans to hold a public hearing on the 2nd of next month, comprehensive policy questioning of the government on the 4th and 5th, department-by-department reviews from the 9th to the 12th, and then activate the budget subcommittee on the 16th for detailed examination. The legal deadline for approval is December 2nd.
The government submitted a budget proposal for next year amounting to 555.8 trillion won, the largest ever. Compared to this year's main budget, it represents an 8.5% increase (43.5 trillion won), and including four supplementary budgets, a 0.2% increase (1.1 trillion won).
The government and the Democratic Party of Korea emphasize the increase compared to the supplementary budget, explaining that "long-term fiscal soundness was also considered," while the People Power Party expressed concerns about covering 90 trillion won through borrowing. On the morning of the same day, Floor Leader Joo Ho-young sharply criticized at the emergency committee meeting, saying, "The government keeps increasing fiscal spending to record highs without presenting any plan to reduce debt," and warned, "Do not turn our country into a debt-ridden nation."
The core issue is expected to be the budget for the Korean New Deal, the government's top priority. The government plans to invest 160 trillion won over the next five years in the Korean New Deal projects and allocated 21.3 trillion won in next year's budget. In his policy speech the day before, President Moon expressed his determination to push forward "vigorously" and "strongly."
However, the People Power Party is determined to cut at least half of the budget, about 10 trillion won. They argue that many projects have poor performance and concerns over unspent funds, and that the government is merely renaming existing projects. The People Power Party proposes reallocating the funds saved from these cuts to COVID-19 response budgets such as emergency child care, support for small business owners, and customized disaster relief. The Justice Party also criticized, saying, "Many projects are just reclassifications of existing ones and are not new at all," and warned, "There is a very high possibility that only slogans exist without any real process."
On the other hand, Democratic Party Floor Leader Kim Tae-nyeon stated at a morning meeting, "Cutting half of the Korean New Deal budget can only be seen as rejecting crisis recovery and future transformation," signaling an intention to defend the original plan, making a clash inevitable.
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