97 Projects with Execution Rate Below Half... Some Budgets Increased by 56%

Extended Budget Increase for Projects with Prolonged Execution Delays
Planned Office: "Priority Inspection of Execution Delays Needed for Budget Reflection"

[Asia Economy Reporters Kim Hyunjung, Jang Sehee]#The execution rate of the Ministry of Gender Equality and Family's Family Center Construction Project budget was 10.7% in 2017, 0.0% in 2018, and 2.0% in 2019, showing almost no spending over a long period. This year, although it is still in the design phase and there is time before construction costs are executed, next year's budget was set at 45.6 billion KRW, which is a 24.8% increase from this year's 36.5 billion KRW.

#The Ministry of National Defense's Gwangju Base Off-site Ammunition Depot project has been temporarily suspended since 2016 and has shown sluggish progress until recently. Moreover, it conflicts with the plan to relocate Gwangju Military Airport, making it uncertain whether the project can resume at the current site. However, the budget was set at 12.5 billion KRW, a 2,181% increase from last year's 548 million KRW.

To ensure efficient execution of the national budget, the National Assembly separately investigates and analyzes central government ministries' projects with poor execution rates. It was found that there are 97 projects that have spent less than half of their allocated budgets. Among them, 51 projects have next year's budget increased by 55.5%, raising concerns about the need to adjust the budget proposal to prevent overestimation.

According to the National Assembly Budget Office's "2021 Budget Proposal Comprehensive Analysis" report released on the 30th, out of 281 annually under-executed projects based on the 2019 fiscal year settlement, 234 projects are included in next year's budget proposal, and among them, 97 projects had an execution rate below 50% as of September this year.

Annually under-executed projects refer to those with an execution rate below 70% in the base year and an average execution rate below 70% over the past four years. Long-term under-execution hampers other investments requiring fiscal input and diminishes the economic stimulus effect of fiscal policy. Therefore, the National Assembly Budget Office has been investigating annually under-executed projects during each year's budget and settlement analysis since the "2007 Fiscal Year Settlement Analysis."

The problem is that next year's budget for projects with prolonged under-execution has rather been increased. Among the 97 annually under-executed projects, 51 projects have budgets that are either increased or maintained at the same level compared to this year, totaling 5.1428 trillion KRW, a 55.5% increase. By ministry, the Ministry of Land, Infrastructure and Transport has the most with 14 projects, followed by the Ministry of Economy and Finance with 10, the Defense Acquisition Program Administration with 6, the Ministry of Unification with 5, and the Ministry of Agriculture, Food and Rural Affairs with 4. By type of under-execution, the main causes are ▲ project delays due to postponed commencement or ordering of services or construction (29 projects) and ▲ non-occurrence of execution reasons due to unmet execution conditions, resulting in unspent budgets (22 projects).

The Budget Office stated, "If the budget for annually under-executed projects in next year's proposal is reduced compared to the previous year, it can be seen that past execution performance was considered for each project. However, if it is the same or increased, there is a possibility that under-execution will continue." It emphasized, "It is necessary to first check whether the causes of under-execution can be resolved and reflect that in the budget." It added, "It is necessary to improve the execution rate through thorough project planning and carefully review the reasons for under-execution during budget review to adjust the budget size to an appropriate level."