Supplementary budget is held hostage

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Supplementary budget is held hostage

The 10 trillion won ($8.88 billion) supplementary budget that the government hopes will boost the economy and create new jobs passed an initial deadline but it is stuck in the National Assembly due to political gridlock.

The government stresses that delay will diminish the impact of the budget, which it planned to execute next month in prop up an economy with declining exports and weak domestic consumption after temporary consumption tax cuts on vehicles ended in June.

Many expected the bill to be passed at Monday’s regular session of the assembly, but the opposition is concentrating on public hearings over the government’s handling of troubled Daewoo Shipbuilding & Marine Engineering (DSME), which is being restructured.

The opposition wanted to question former Finance Minister Choi Kyung-hwan, senior presidential secretary for economic affairs Ahn Jong-beom and former Chairman of the Korea Development Bank Hong Ky-ttack over whether they gave special favors to DSME, or deliberated overlooked the shipbuilder’s financial problems at confidential meetings in the West Wing of the Blue House earlier this year.

The government and ruling Saenuri Party argue that has nothing do with the supplementary budget and that it should be treated separately.

“The opposition agreed to pass the bill and then discuss the so-called West Wing public hearings, but they broke the agreement,“ said Chung Jin-suk, the Saenuri Party’s floor leader, on Monday. “I seriously worry about how the National Assembly will function from now on or how it can be trusted by the people if we continue to break our agreements and promises. I once again urge the opposition parties to reconsider this issue.”

The Saenuri Party said the bill needs to be passed as early as possible to maximize its impact on the local economy.

“The supplementary budget needs to be executed before the Chuseok [Korean Thanksgiving] holiday, and it takes about two more weeks after the National Assembly passes the bill to actually execute the budget,” said Chung.

The opposition, on the other hand, want at least two of the three key figures to be questioned before they sign the bill.

Meanwhile, Minister of Strategy and Finance Yoo Il-ho recently released a statement emphasizing the necessity of passing the bill.

“Timing is the most important thing when it comes to a supplementary budget and we will not be able to see the expected impact coming from it if we wait too long,” Yoo said.

Leaders from three major parties met Monday afternoon to discuss this matter but weren’t able to agree.

Some analysts see a Plan B, in which the government includes the supplementary budget in next year’s main budget, which is due at the National Assembly by Sept. 2.

If the supplementary budget fails to be implemented as soon as possible, Korea’s economy may see its growth decelerate to below 2 percent, according to the Hyundai Research Institute.

The private think tank warned that the implementation of the budget is already late considering it will take roughly three to four months to execute the budget.

The Ministry of Strategy and Finance projects the budget will add 0.2 percentage points to growth.


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