After approving several sets of additional fiscal injections so far this year to deal with the fallout of the COVID-19 pandemic, South Korea is facing mounting calls for yet another extra budget amid the recent flood damages.
While political parties unanimously called for an additional budget injection, the finance minister expressed disapproval over what he saw as reckless spending amid growing deficits.
The government, the ruling Democratic Party of Korea and the presidential office Cheong Wa Dae will hold an emergency meeting on Wednesday morning to discuss the need to draft a new extra budget, officials said Tuesday.
“It is the party’s opinion that the possibility of an additional extra budget should be left on the table, lest reserve funds be insufficient to reorganize the (flood-damaged) water facilities,” said the Democratic Party’s chief strategist Rep. Jin Sung-joon.
Such call for an extra budget was also echoed by opposition parties.
“Considering that much of the state budget has already been used for COVID-19 measures, it is inevitable that we should come up with a separate budget plan to deal with the flood damages,” said Kim Chong-in, interim leader of the main opposition United Future Party.
The progressive minority Justice Party leader Rep. Sim Sang-jeung also claimed that an immediate disaster relief budget should be drafted, given the urgency of the situations.
Korea has so far this year approved fiscal injections totaling 277 trillion won ($233.83 billion), including the recently effectuated third supplementary budget worth an unprecedented 35.1 trillion won.
Some 5.6 trillion won was allocated as reserve funds, of which 3 trillion won has already been executed to deal with the COVID-19 fallout.
The political circles’ push came in response to Deputy Prime Minister and Finance Minister Hong Nam-ki’s apparent refusal to further adjust the fiscal plan amid uncertainties.
“We currently have access to reserve funds worth 2.6 trillion won,” the fiscal chief said in a press briefing on Monday, when asked about the prospects of a fourth extra budget bill.
“Also, some of the infrastructure restorations (for flood damages) may take more than a few months, in which case the related budget may not necessarily be needed within this year.”
The fiscal chief’s defensive stance largely reflected the country’s budget deficit, caused by the unexpected fiscal injections and the fall in tax revenues due to the prolonged epidemic crisis.
The state’s gross revenue came to 226 trillion won for the first half of the year, down 20.1 trillion won from a year earlier and 4.8 percentage point lower than the original half-year target, according to data from the Ministry of Economy and Finance.
During the cited period, expenditure soared to 316 trillion won, leading to a shortfall of 90 trillion won.
The largest dip came in tax revenues, at 132.9 trillion won as of end-June, down 23.3 trillion won on-year.
But speculations are also mounting that Hong may end up succumbing to the Blue House and ruling party’s pressure as in the case of emergency disaster relief funds. Hong had originally argued that the funds should be offered to the lower 70 percent of the income graph but later consented to the 100 percent scenario suggested by the Democratic Party.
Meanwhile, President Moon Jae-in urged for thorough fiscal measures for flood damages, without touching upon the disputed extra budget agenda.
“It is now time to concentrate all efforts on damage recovery, and what counts the most is speed,” he said during an emergency Cabinet meeting, calling for “all available resources, including reserve and disaster relief funds.”
Hit by the recent downpours and the consequent inundations, 42 people have been killed or left missing across the nation, with more than 7,500 displaced.
By Bae Hyun-jung (firstname.lastname@example.org