5th consecutive supplementary budget imminent
On Tuesday, the Blue House and the ruling Democratic Party reached an agreement to push for the extra spending.
“[The government] will pursue the supplementary budget aggressively,” said Prime Minister Lee Nak-yon in meeting with the ruling Democratic Party that was also attended by Kim Soo-hyun, Blue House policy chief.
The meeting was the third between the Moon government and the ruling party this year.
“As advised by the International Monetary Fund [IMF] on the subject of creating a supplementary budget considering the downside risks, we will submit our proposal by the end of April,” Lee said.
The IMF, in concluding its Article IV Mission in March, said that while it is feasible for Korea to achieve its target of 2.6 percent to 2.7 percent growth this year, it needs a supplementary budget of more than 0.5 percent of the nation’s gross domestic product, or 8.9 trillion won ($7.83 billion).
“I really want to emphasize we’re very positive about Korea’s economy because it’s an incredibly strong economy,” IMF team leader Tarhan Feyzioglu said, but he added that Korea, as an open economy, faces certain headwinds.
“That’s why this is an important opportunity for the government to step in and help growth,” Feyzioglu said. “And that’s why we strongly encourage the government to have a supplementary budget issued as early as possible.”
Prime Minister Lee said the government will also use the supplementary budget to tackle the fine dust problem, adding that the government will not wait until next year to deal with air pollution.
Hong Ihk-pyo, senior press officer for the Democratic Party, said the ruling party and the government have agreed on the necessity of drawing up the supplementary budget not only to pre-emptively address economic weakness but to also fight air pollution, which has reached disaster levels and is threatening the health of the public.
The budget will be used to develop a system that will measure fine dust scientifically and also develop infrastructure that will reduce the dust levels.
Last month, the Environment Ministry announced projects including an outdoor air purifier that can be installed on the rooftops of public buildings, as well as in subway station ventilation.
Each outdoor air purifier is expected to cost around 100 million won to 200 million won, and the cost will be covered by the supplementary budget. This project is expected to launch in May.
If the government comes up with the supplementary budget, which then must be approved by the National Assembly, it would be the fifth consecutive year that additional spending has been approved. It would be the third supplementary budget by the current administration.
Although the size of the budget has yet to be confirmed, speculation suggests it might be around 5 trillion won.
The prime minister, while meeting with reporters last week during his visit to China, said that while the government has already started preparing the supplementary budget, it wouldn’t be easy to come up with one as large as that proposed by the IMF.
If the government draws up the supplementary budget, it will likely happen after President Moon returns from his two-day trip to Washington on April 10.
BY LEE HO-JEONG [firstname.lastname@example.org]