Democratic Party: "Supplementary Budget Should Be at Least 20 Trillion Won... Deficit-Financing Bonds Needed for Funding"

"Supplementary Budget to Be Put on the Agenda of Ruling-Opposition-Government Consultative Body"

The Democratic Party of Korea has argued that the size of the supplementary budget (extra budget) it is demanding from the government should be at least 20 trillion won. The party also emphasized that deficit-financing government bonds should be issued to secure funding for the supplementary budget.

On the morning of the 8th, at the National Assembly in Yeouido, Seoul, Heo Young, the head of the Democratic Party's Livelihood Economic Recovery Team, is speaking at a meeting on the supplementary budget organized by the team. Photo by Yonhap News

Heo Young, a lawmaker who heads the Democratic Party's Livelihood Economy Recovery Team, stated at a meeting on the supplementary budget held at the National Assembly in Yeouido, Seoul, on the 8th, "The areas in need of a supplementary budget are broad and significant, including boosting private consumption, fostering future industries, creating jobs for young people, and promoting balanced regional development. Including the reduced budget, a basic amount of around 20 trillion won is necessary." The Democratic Party explained that, considering the future GDP growth rate, fiscal multiplier, and approximately 4 trillion won in reduced budget, a supplementary budget exceeding 20 trillion won is required.

The Democratic Party maintains that a supplementary budget is necessary to raise the declining GDP growth rate. While the government has forecast this year's GDP growth rate at 1.8%, global investment bank JP Morgan has projected it at 1.3%. Hong Seongguk, chair of the Democratic Party's National Economic Advisory Council, pointed out, "The current government budget was formulated based on an assumed GDP growth rate of 2%. This is about 0.5 percentage points higher than the general forecast of 1.5%." He added, "The Korean economy has been struggling even before the outbreak of the civil unrest."

The Democratic Party plans to secure funds for the supplementary budget by issuing deficit-financing government bonds. Heo stated, "JP Morgan lowered its GDP growth forecast to 1.3% due to uncertainty and the sharp decline in consumer sentiment, which has weakened domestic demand. It is important to resolve this uncertainty and revitalize domestic demand by issuing deficit-financing government bonds." Democratic Party lawmaker Ahn Dogeol also explained, "Considering the outstanding balance of government bonds and the inflow of global capital expected with the inclusion in the World Government Bond Index (WGBI) in November, the bond market remains stable. Unless the issuance is exceptionally large, there is sufficient capacity to absorb additional government bonds." He added that, in addition to deficit-financing bonds, additional tax revenue and surplus funds from various reserves will also be utilized as sources for the supplementary budget.

The Democratic Party plans to enter into discussions with the government and the ruling party regarding the supplementary budget. Lee Jeongmoon, the Democratic Party's chief deputy policy chair, stated, "This week, the tripartite consultative body of the ruling and opposition parties and the government will conduct working-level talks. We will put the supplementary budget on the agenda in relation to the livelihood economy and discuss this matter with the government and the ruling party."