Choi Sang-mok, deputy prime minister for economic affairs and Minister of the Ministry of Strategy and Finance, said on the 23rd, “We will allocate a budget of 11.6 trillion won through ‘allocation before the start of the fiscal year’ so that it can be executed from Jan. 1 next year.”
Deputy Prime Minister Choi noted at a press briefing held at the Government Complex Sejong in the morning that “there has been no budget allocation before the start of the fiscal year for the past two years.”
Article 43, Paragraph 3 of the National Finance Act specifies that “the Minister of the Ministry of Strategy and Finance can allocate the budget before the start of the fiscal year as prescribed by presidential decree when necessary.”
According to Article 16, Paragraph 5 of the enforcement decree of the National Finance Act, expenses eligible for allocation before the start of the fiscal year include: ▲ expenses paid abroad ▲ expenses required for the operation and repair of ships ▲ expenses paid in areas with inconvenient transportation or communication ▲ expenses for purchasing supplies necessary for each office ▲ expenses for special activities including crime investigation ▲ travel expenses ▲ expenses for public projects requiring early execution for economic policies ▲ expenses for disaster recovery projects.
The government's allocation of the budget before the start of the fiscal year was implemented from 2016 to 2022 but not last year and this year. This time, 3.9 trillion won is allocated to the health, welfare, and employment institutional sector, 4.4 trillion won to the social overhead capital (SOC) institutional sector, 1 trillion won to the environment institutional sector, 800 billion won to the agriculture, forestry, fisheries, and food institutional sector, 400 billion won to the defense institutional sector, 200 billion won to the education institutional sector, 400 billion won to the culture institutional sector, 100 billion won to the industry, small and medium-sized enterprises, and energy institutional sector, 200 billion won to the diplomacy and unification institutional sector, and 100 billion won to the general administration and other institutional sectors.
However, Deputy Prime Minister Choi drew a line regarding the ‘possibility of supplementary budget formulation in the first quarter of next year.’ Deputy Prime Minister Choi emphasized that “since the passed budget has not been executed yet, the priority is to ensure that the budget is executed from Jan. 1 next year.”
He added, “In the past, local governments had to secure their share for the execution of central government subsidy projects, but we plan to enable ‘swift execution.’” He said, “We will prioritize the disbursement of government funds even before local governments secure their share or shorten the government fund disbursement period from 10-15 days to within 7 days.” To this end, the Ministry of Strategy and Finance plans to allocate an additional 3 trillion won as discretionary expenditure for subsidies.
Regarding the opinion of Lee Chang-yong, governor of the Bank of Korea, on the need for a supplementary budget, Deputy Prime Minister Choi said, “We will not know when the fiscal role is needed until next year it comes in full view next year,” adding, “I understand Governor Lee's words as questioning whether a supplementary budget might be necessary for the entire year, given the current situation with the passed reduced budget.” He continued, “It is difficult to give an immediate answer on the supplementary budget,” and added that “It still holds true what I said about agreeing on the need for active fiscal policy.”
He also responded to a question about whether the policy stance has shifted from sound finance by saying, “The fiscal stance can change depending on the economic situation, but the stance of sound finance and sustainability remains unchanged.”
He continued, “This is my belief that it should not change even if the government changes,” and stated, “As the global trade uncertainty increases with the inauguration of the new U.S. Trump administration next year, the government needs to implement fiscal policy more actively than before concerning short-term responses.”