Following the unprecedented passage of a 'reduction budget' at the end of last year, the 'supplementary budget' that had been mired in controversy will eventually be pursued in light of a 'large forest fire.' This supplementary budget is the second under the current government, following the first supplementary budget initiated to fulfill the 'coronavirus loss compensation' promise shortly after the launch of the Yoon Suk-yeol government in May 2022.
The government's initially proposed size for the supplementary budget is 10 trillion won. This budget is allocated not only for responding to disasters and calamities like the recent large forest fire but also for three essential areas with relatively less political contention: 'trade' and 'livelihood.' The remaining task for the realization of the supplementary budget is now political agreement.
◇ Yoon Suk-yeol government's supplementary budget, first since the initial supplementary budget after its launch in 2022
Choi Sang-mok, Deputy Prime Minister and Minister of Economy and Finance, officially announced the pursuit of a 10 trillion won 'essential supplementary budget' through an urgent meeting of ministers related to economic issues on the 30th. He noted, “We will focus on the three key areas of ▲ disaster response ▲ trade and enhancing artificial intelligence (AI) competitiveness ▲ support for livelihoods, where there are no differences between the ruling and opposition parties.”
The Yoon Suk-yeol government had prepared a 'super large supplementary budget' totaling 62 trillion won (including municipal subsidies) shortly after its launch in May 2022. Based on that year, it was considered the second supplementary budget. However, this was an unavoidable supplementary budget to fulfill President Yoon's election promises. The Yoon Suk-yeol government has since emphasized sound fiscal principles and kept its distance from supplementary budgets.
Although this supplementary budget targets only essential areas, the scale (10 trillion won) is by no means small. Looking at the supplementary budgets over the past decade, the budgets in 2018 (3.9 trillion won for youth job measures), 2019 (5.8 trillion won for fine dust and livelihood economic support), and the fourth supplementary budget in 2020 (7.8 trillion won for small businesses and the self-employed) were smaller in scale, while the third supplementary budget related to COVID-19 in 2020 (35.1 trillion won), the second supplementary budget in 2021 (34.9 trillion won), and the second supplementary budget in 2022 (62 trillion won) were significantly larger. Most others have been set around the 10 trillion won mark.
◇ Stagnant supplementary budget discussions for three months… Drive activated due to the forest fire
It is not exclusively a 'one-point' supplementary budget for forest fire response, but the supplementary budget debate that has been ongoing since the beginning of the year has finally gained momentum due to the 'forest fire.'
The supplementary budget debate ignited after the opposition party handled the unprecedented 'reduction budget' in December last year. The preliminary budget, reduced to half (24 trillion won) from the government's original proposal (48 trillion won), was one of the main budgets that were cut. Coincidentally, large disasters and calamities, such as the accident involving Jeju Air at Muan International Airport and significant forest fires in the Gyeongsang region, occurred this year, rapidly depleting the preliminary budget. The ruling party criticized the opposition's cuts to the preliminary budget, while the opposition countered, saying, 'There is still enough capacity for response.' The dispute over responsibility between the ruling and opposition parties turned the supplementary budget into a subject of political contention.
With the stagnant negotiations between the ruling and opposition parties, the government eventually announced its intention to push for the supplementary budget publicly. The government had maintained that a 'guideline' for the supplementary budget should be drawn up through a consultative body involving both parties. However, the atmosphere shifted following Prime Minister Han Duck-soo and Deputy Prime Minister Choi Sang-mok's visit to the forest fire damage site on the 28th.
At that time, at the site, Kweon Seong-dong, representative of the People Power Party, suggested, “Even if it means processing disaster response preliminary funds on a one-point basis, the government needs to swiftly create a supplementary budget plan.” Deputy Prime Minister Choi replied, “We will review all feasible actions that the government can take swiftly and aim to communicate them to the public soon.” Kang Young-kyu, spokesperson for the Ministry of Economy and Finance, explained the background: “In consideration of the urgency for recovery from the fire damage and the uncertainty regarding whether a national policy council will be held, we have decided to limit the supplementary budget to essential areas that both parties can agree on.”
◇ What's left is agreement between the ruling and opposition parties… Decision can take up to three months
The government's declaration of the 'pursuit of the supplementary budget' is just the beginning. Although the government has initiated the process, political agreement is essential for the actual supplementary budget to be prepared and passed by the National Assembly. Deputy Prime Minister Choi is also concerned about this. He emphasized, “If projects that differ between the ruling and opposition parties or the increase of projects that do not align with the supplementary budget's purposes are pushed during the parliamentary review process, political conflicts could indefinitely extend the review, preventing the supplementary budget from producing its intended effect.”
The target 'golden time' for the government's supplementary budget is in April. However, if the political disputes drag on, it could take months before the supplementary budget is finalized. The longest intervals from submission to decision for supplementary budgets were seen in 2008 (June 20 to September 18) and in 2019 (April 25 to August 2), which extended beyond three months. In contrast, the fourth supplementary budget in 2020 (September 11 to 22) and the second supplementary budget in 2022 (May 13 to 29) took less than 20 days.