Lopsided Budget Allocation
The South Korean government allocated 71.4 percent of its 2020 budget for the first half of next year. The ratio is a seven-year high and is equivalent to more than 300 trillion won.
Specifically, the total expenditures for next year will be 427.1 trillion won and those for the first half will be 305 trillion won. For reference, the figures were 399.8 trillion won and 281.4 trillion won this year.
At present, the South Korean government is eager to stimulate the economy. The ratio of budget allocation for the first half amounts to 82.2 percent when it comes to employment-related budgets. In addition, the ratio is as high as 74.3 percent and 79.3 percent as for SOC and R&D budgets, respectively. 9.6 trillion won has been included for pre-fiscal year contract announcements for budget execution and the amount has been increased by 800 billion won in one year.
With the National Assembly not working well, applicable laws for budget execution have yet to be passed for some projects such as farming household subsidization (2.6 trillion won) and material, component and equipment industry assistance (2.1 trillion won). Budgets for the projects cannot be executed until the Agricultural Income Maintenance Act amendment and the material, component and equipment industry special act for special accounting are handled.
Experts point out that the budget allocation is not very efficient. “The government is planning to maximize fiscal spending effects early next year, but it remains to be seen whether the fiscal execution will be efficient in relation to economic conditions,” said Pusan National University economics professor Choi Byeong-ho, adding, “Supplementary budgets may be necessary depending on the pace of economic recovery.”