Now is the time for consensus on the budget

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Now is the time for consensus on the budget

The National Assembly appears to be moving toward a full-fledged discussion on a supplementary budget. This shift follows Democratic Party (DP) Chair Lee Jae-myung’s concession on Jan. 31, when he stated, “If the government and the ruling party refuse to approve a supplementary budget because of the livelihood support fund, I am willing to drop the proposal.”
 
Until now, the DP had insisted on using the supplementary budget to provide a nationwide 250,000 won ($171) livelihood recovery subsidy. However, the People Power Party (PPP) had strongly opposed the plan, arguing that it would impose an additional fiscal burden while having minimal impact on boosting domestic consumption.
 
That discussions on a supplementary budget have emerged less than two months after the 2025 budget was passed is due to the DP’s unilateral push for a historic budget reduction at the end of last year. As a result, the PPP has criticized the DP’s call for a supplementary budget, demanding that the opposition first apologize to the public for its forced budget cuts. 
 
However, the current economic situation leaves little room for assigning blame. According to a survey released on Sunday by the Korea Enterprises Federation (KEF), which polled 100 economists, Korea’s projected economic growth rate for this year stands at an average of 1.6 percent, lower than the government’s forecast of 1.8 percent.
 
Additionally, 64 percent of respondents predicted prolonged economic stagnation. Exports remain weak, and domestic consumption is severely contracting. Given these conditions, government fiscal intervention is the only viable option to stabilize the economy.
 
Even acting President Choi Sang-mok and Bank of Korea (BOK) Gov. Rhee Chang-yong have already acknowledged the need for a supplementary budget. The National Assembly Budget Office has also pointed out that accelerating the execution of the existing budget alone will not be sufficient to support economic recovery.
 
The PPP, despite its criticism of the DP’s handling of the budget, also acknowledges the necessity of a supplementary budget. Now that Lee has backed down on the subsidy proposal, it is imperative that the ruling and opposition parties swiftly reach a consensus on a supplementary budget focused on stabilizing people’s livelihoods.
 
Also, a window of opportunity has also opened for pension reform. Lee has proposed finalizing parametric reform of the National Pension by the end of February. Last year, the ruling and opposition parties tentatively agreed to raise the national pension contribution rate from the current 9 percent to 13 percent. However, negotiations collapsed over disagreements on the income replacement rate, with the DP advocating for 45 percent and the PPP insisting on 43 percent.
 
Meanwhile, delays in pension reform are causing a staggering daily deficit of 88.5 billion won in the National Pension Fund. Regardless of who becomes the next president, reforming the national pension will inevitably be a top priority.
 
Raising contributions while reducing benefits makes pension reform inherently unpopular. However, such politically burdensome reforms might actually be easier to implement during this period of presidential vacancy.
  
Translated using generative AI and edited by Korea JoongAng Daily staff.
 
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