By Nam Hyun-woo
The government and ruling Saenuri Party agreed Friday in a meeting at the National Assembly to prepare a supplementary budget for 2017, possibly by as early as February.
They also decided to frontload spending of the regular budget earmarking 60 percent of it for the first half, including 2.3 trillion won ($1.91 billion) in funding to support lower-income earners.
“Even with the government boosting spending in the first half, this may not be enough to pump up the economy,” Rep. Lee Hyun-jae said.
“As the government has collected its targeted 2016 tax revenue, the party urged it to draw up a supplementary budget by February, which was received positively.” Lee said the actual amount will be discussed later.
The government initially planned to set up a supplementary budget in the first half of next year after reviewing the economy’s first-quarter performance. A day earlier, Finance Minister Yoo Il-ho said the administration would consider additional spending “if next year’s growth rate is projected to be lower than 2.5 percent.”
In response to this the ruling party asked the government to consider earlier execution, saying political events such as a possible presidential election are scheduled in the first half of the year, which could have economic consequences.
“If the economy collapses, enormous efforts will be required for recovery,” Lee said. “Since the outlook for next year is not optimistic and timing is important in implementing additional spending, the party strongly called on the government to draw up a supplementary budget by February.”
While accepting the ruling party’s suggestion, the government is however considering a more prudent approach. “Setting up a supplementary budget requires a broad review of the economic situation early next year,” Deputy Finance Minister Lee Chan-woo said after the meeting. “The government has yet to decide when to draw up a supplementary budget.”
The administration will also hold meetings with the opposition parties on the timing of any additional spending, as a supplementary budget could be controversial.
During Friday’s meeting, the government decided to pay 50 percent of the transportation costs for egg imports to stabilize egg prices, which are soaring due to the country’s deadliest outbreak of avian influenza. It will also reduce tariffs on some imported eggs.