Possibility of Abolishing the Win-Win Consumption Support Fund
Controversy Over Haphazard Budgeting in Previous Supplementary Budget Projects
Concerns Over Side Effects of Short-Term Review and Adjustment
[Asia Economy Reporters Kim Hyunjung (Sejong), Son Seonhee (Sejong), Jang Sehee] The second supplementary budget (supplementary budget) focused on boosting consumption, requested for an increase by the ruling party, is under revision. The budget for consumption coupons and vouchers, prepared to support sectors severely affected by the COVID-19 pandemic such as culture, arts, and sports, is expected to be significantly reduced, and projects like the Win-Win Consumption Support Fund (credit card cashback) are likely to be postponed or abolished. There are voices calling for more thorough prior review as cases of haphazard budgeting have been confirmed even in existing supplementary budget projects.
According to the government and the National Assembly on the 16th, a plan to significantly reduce the 600 billion KRW budget allocated for consumption coupons and voucher projects among the currently reviewed second supplementary budget projects is likely. Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, said, "Since the COVID-19 quarantine situation has become severe, if a reduction is necessary, adjustment of the amount will be required."
Originally, the government planned to issue additional consumption coupons and vouchers for six major sectors according to the vaccination rate level (50% for movies, exhibitions, sports viewing, etc., 70% for tourism, railroads, etc.). However, with the recent Level 4 quarantine measures in the metropolitan area and the spread intensifying to non-metropolitan areas, a full adjustment has become inevitable. Most of the reduced budget is expected to be allocated to the compensation fund for small business losses.
However, many existing supplementary budget projects were also haphazardly budgeted, raising concerns about side effects from short-term review and adjustment. The ‘Street Vendor Disaster Support Fund’ from the first supplementary budget of 2021, prepared in March to support COVID-19 victims, is a representative example.
According to data submitted by the Ministry of SMEs and Startups to Rep. Choo Kyung-ho of the People Power Party, as of the end of June, there were 819 applicants for this support fund, which accounts for only 2% of the total budget (20 billion KRW). The payment status was not even tracked. More than 47% of all applicants were concentrated in the metropolitan area; Seoul and Gyeonggi regions had 199 and 189 applicants respectively, while Daejeon had none. A project official from a local government said, "Most of them are really small-scale vendors, so business registration felt like a burden," adding, "They were probably also concerned about exposure to crackdowns on street vendors if personal information was used." The government initially estimated the number of eligible street vendors at around 40,000 when budgeting, but the actual number managed and identified by local governments was only about 28,000, which has been criticized as insufficient prior consideration.
As COVID-19 cases surge rapidly, there are also calls to organize vaccine-related projects and budgets more systematically. The Senior Expert Office of the National Assembly Budget and Accounts Special Committee recently pointed out in its review report on the second supplementary budget, "Even considering additional vaccinations (boosters) due to the emergence of variant viruses, there is a high possibility of leftover quantities according to the government's herd immunity formation plan (targeted for November)," and emphasized, "It is necessary to prepare thorough and transparent plans for the use of any remaining quantities in the future."
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