Academia: "Supplementary Budget Formation Requirements Should Be Specified... Fiscal Deficit Repayment Rules Must Be Introduced"

[Asia Economy Sejong=Reporter Son Seon-hee] The academic community has raised concerns that the government’s criteria for drafting supplementary budgets (추경) need to be specified in detail. The intention is to prevent indiscriminate supplementary budget drafting due to political situations such as elections.

In the May issue of the fiscal monthly magazine "Nara Jaejeong," published by the Korea Fiscal Information Service on the 5th, the presidents of the Korean Association for Policy Studies, Korean Tax Association, Korean Fiscal Policy Association, Korean Association for Public Administration, and Korean Fiscal Association published columns on the new government’s fiscal policy direction.

Park Jong-su, president of the Korean Tax Association, stated, "The government sometimes uses unexpected excess tax revenue and global surplus funds not for national debt repayment but as supplementary budget resources, or revives budgets omitted during the main budget review in the supplementary budget," and suggested, "The ambiguous criteria for supplementary budget drafting in the National Finance Act should be specified more concretely, and sanctions should be strengthened when the government violates legal regulations."

Park also emphasized, "To prevent repeated indiscriminate supplementary budgets aimed at increasing the budget, it is necessary to introduce fiscal rules for controlling the total fiscal volume and for repaying fiscal deficits, and to utilize next-generation fiscal rules and fiscal rules for economic crisis response."

Along with this, many proposals were made to strengthen regulations for stricter fiscal management under the new government. Ok Dong-seok, president of the Korean Fiscal Policy Association, said, "The new government’s fiscal policy direction should primarily establish fiscal rules as an institutional foundation for fiscal soundness," and added, "The increase in government debt allowed during the term or the scale of the fiscal balance should be reasonably limited."

Ok further stated, "In fiscal rules, not only the content but also the form of parliamentary approval should be considered," proposing to strengthen the parliamentary quorum for adopting fiscal rules or allowing exceptions, such as requiring "two-thirds consent of the total members of the National Assembly."

In particular, Ok mentioned the introduction of the "policy finance budget system." The policy finance budget system refers to a system that analyzes the effects and costs of policy financing carried out by public sector entities such as financial public enterprises and attaches the results annually to the budget proposal submitted to the National Assembly. This is to review policy finance, a representative rigid expenditure, alongside other government expenditures from the budget drafting stage to appropriately adjust and manage resource allocation.