[EDITORIALS]The supplementary budgetThe government has decided to draw up a supplementary budget of 4 trillion won ($3.9 billion) to 5 trillion won in the middle of next month. The extra budget is needed to make up for the revenue shortage that resulted from the economy’s sluggishness, and for emergency expenses that could be needed in the second half, the government explained.
There is no reason for the government to abstain from making a supplementary budget if the government needs to spend more than it had planned, due to changes in the economic conditions. But the government should change its old practice of drawing up an extra budget every year, as if it were an annual event.
Will the government maintain the old practice of front-loading the budget in the first half and then making a supplementary budget in the second half every year? Such a practice discloses that the government is not cautious in drawing up its budgets. It also makes it difficult to manage budgets rigorously.
Budget Minister Byeon Yang-kyoon said, “The supplementary budget is not to artificially boost the economy. Government finances will be managed with a neutral fiscal policy.” It is difficult to know whether he means that an extra budget will not have an effect on the domestic economy, or that the government will draw up a supplementary budget regardless of economic conditions.
An extra budget cannot be economically neutral. A supplementary budget is an addition to the original budget. Big or small, it will have an effect on the economy. Covering a revenue shortage is essentially boosting the economy. Just as the revenue shortage resulted from the economic downturn, covering it with a deficit budget means covering the sluggish economy.
Considering that gross domestic product grew only 3 percent year on year in the first half of this year, the growth in the second half must rise to at least 5 percent to meet the government’s adjusted goal of 4 percent.
The government failed to buoy the economy, though it spent 60 percent of this year’s budget in the first half. Without this extra budget, it would be difficult for second-half growth to reach 5 percent.
Accordingly, the government should admit to the sluggish condition of the economy, and persuade the public of the need for a supplementary budget to rejuvenate it.