The history of supplementary budgetPARK HAE-RI
The author is a political and international planning team reporter of the JoongAng Ilbo.
The history of supplementary budget in Korea is colorful. The third last supplementary budget before the Moon Jae-in administration was drawn up in 1972, the 10th year of the Park Chung Hee government. According to a report by the JoongAng Ilbo, the economy was hit by a slump at the time, and “the economic growth rate in the first half of the year was 5.7 percent, a considerable slowdown from 15.1 percent in the same period last year.”
Gas and coal prices soared due to the oil crisis, and the flooding of the Namhan River resulted in 500 casualties. The government decided to add 62 billion won ($54 million) in supplementary budget to stimulate the economy.
The fourth last supplementary budget before the Moon administration was prepared in 1961, when military rule began as a result of the May 16 coup. In 1950, at the time of the Korean War, seven supplementary budgets were drawn up.
It is no exaggeration to say that the four years of the Moon administration set a milestone in the history of supplementary budgets. Since the first supplementary budget for job creation and economic stability, there have been eight additional budgets so far. The Moon government’s third supplementary budget last year left various records. It was the biggest in history at 35.1 trillion won.
The process was not easy. After the opposition party did not agree to form a session, the ruling party passed the supplementary budget bill five days after beginning the review with the absence of the opposition party. The Moon administration’s fourth supplementary budget — the first in 59 years — was made two months later.
In the meantime, fiscal soundness was aggravated. National debt, which was 660.2 trillion won at the beginning of the Moon administration, is about to break 1 quadrillion won. In 2015 when he was the opposition leader, Moon Jae-in criticized the Park Geun-hye administration’s budget plan after national debt exceeded 40 percent of the GDP, a barometer of fiscal soundness. When he became the president, Moon changed his position and said that Korea’s debt-to-GDP ratio was drastically lower than the OECD average of 110 percent. As of July 24, the National Assembly passed another supplementary budget of 34.9 trillion won, and Korea’s debt ratio rose to 47.2 percent.
It is true that the unprecedented Covid-19 pandemic made the lives of ordinary people tough. But the actual effect of the supplementary budget is uncertain. The explanation for the disaster aid that divided the people was insufficient. There is criticism that budgets from the last supplementary plan were not even executed entirely. I can’t understand why the government is stingy in repaying its debt when last year’s surplus tax revenue reached 30 trillion won.
There is no guarantee that the government won’t use another supplementary budget as it frequently resorts to. Debt is a burden on the future generation and decisions related to it must be made carefully. It is the duty and responsibility of the administration in the remaining seven months in office.