President Moon's 100 Major National Tasks See Budget Cuts One After Another for Next Year (Comprehensive)

Significant Reduction in Standing Committee Review Cuts Government Proposal by 870 Billion Won
Opposition Lawmakers Demand Cuts to 'Korean New Deal' Including COVID-19 Response

[Asia Economy Reporter Jang Sehee] As the National Assembly's Special Committee on Budget and Accounts completed the first round of budget cuts for next year's budget proposal, it has been confirmed that the budgets related to the 100 major national tasks announced by the Moon Jae-in administration at the time of its inauguration were repeatedly cut during the standing committee review process. Most of these projects had poor past execution records or unclear project plans.

According to the '2021 Budget Proposal and Fund Operation Plan Budget Adjustment Subcommittee Review Materials' obtained by Asia Economy on the 25th, the relevant standing committees, including the Planning and Finance Committee, Environment and Labor Committee, Political Affairs Committee, and Industry, Trade, Energy, Small and Medium Venture Business Committee, significantly cut budgets related to the Moon administration's national tasks. The Budget Committee conducted budget reviews for 16 standing committees from the 16th to the 23rd and decided to reduce about 871.4 billion KRW compared to the government proposal. Typically, if the Budget Committee wants to increase the amount cut by the standing committees, it must obtain their consent again, but this has not been customary so far. This means it is difficult to restore budgets cut by the standing committees.

In the Environment and Labor Committee, budgets related to youth and elderly employment, which have been controversial regarding their effectiveness, were cut one after another. Although the Moon administration emphasized being a 'job government' and pledged to strengthen job safety nets in preparation for unemployment and retirement, the effectiveness has been limited so far.

For example, the Youth Industry On-the-Job Learning Support Project, which was cut by 4.5 billion KRW, saw the employment retention rate six months after training drop sharply from 75.5% in 2017 to 54.9% last year. This project supports companies in hiring young people who want to work as learning workers and providing on-site training to cultivate practical talents in industrial sites. The government initially allocated 322.4 billion KRW for this project.

Additionally, the New Middle-Aged Social Contribution Activity Support was cut by 3.523 billion KRW out of the 47.349 billion KRW submitted by the government, and the Middle-Aged Employment Support Project budget was cut by 425 million KRW out of 31.113 billion KRW. There have been criticisms that middle-aged employment projects lack effectiveness. According to the Employment Information Service, the repeat participation rate for elderly jobs reaches 43%.

In the Planning and Finance Committee, many budgets related to inter-Korean economic cooperation were cut. The Northern Economic Cooperation Committee's operating expenses were cut by 160.5 million KRW, and the interest subsidy project for economic cooperation promotion funds was cut by 496 million KRW. Although the committee was launched following President Moon's New Northern Policy vision, economic cooperation with northern regions has been difficult due to the prolonged COVID-19 pandemic.

The interest subsidy project for economic cooperation promotion funds involves providing low-interest, mid- to long-term financial support for development projects in developing countries based on funds procured (market borrowing) by the Export-Import Bank of Korea. However, the projects budgeted for 2020 had not been approved as of the end of September, and there were no execution results as of the end of September, leading to budget cuts.

Additionally, in the Industry, Trade, Energy, Small and Medium Venture Business Committee, the Home Smart Power Platform Project was cut by 61 billion KRW, the ICT Convergence Smart Factory Project by 16 billion KRW, and the Industrial Accident Hospital Support Project by 6.51 billion KRW.

Budgets related to the 'Korean New Deal' for responding to the COVID-19 crisis are also expected to be significantly cut. Budget Committee members from the People Power Party?Chu Kyung-ho, Kim Hyung-dong, Park Sung-min, and Lim Eui-ja?called for a full cut of 600 billion KRW for the New Deal Fund project under the Industrial Bank of Korea, which is under the Financial Services Commission. They argued that it is inappropriate for the government budget to bear the risk of losses, and pointed out that the differences between the New Deal Fund and other funds such as the Ministry of SMEs and Startups' mother fund are unclear and that the project plans are insufficient.

Meanwhile, the 2021 budget will be finalized after passing the plenary session following the National Assembly Budget Committee's review.

This content was produced with the assistance of AI translation services.