Budget to Focus on Four-Rivers Project, Welfare, Defense
In-depth deliberation will guarantee proper budget execution
The Special Committee on Budget & Accounts of the National Assembly has been playing a major role in controlling the state budget as charged by the legislative body via in-depth deliberation from a comprehensive and global perspective. The following issues will likely be dealt with during the debate of the budget’s settlement for the fiscal year 2009.
First, is the issue of results of the extra budget introduction for the last year. The government earmarked an unprecedented level of extra budget (28.1 trillion won) to cope with the global economic crisis that began at the end of 2008. The government stressed the need to tackle problems arising from the sub-prime loan crisis in the United States and create more jobs. So the National Assembly will focus on the consequences of the budget execution and possible problems.
Second, is the issue of the management of state debts. As of the end of 2009, the nation’s debts (including those from both the central and provincial governments) increased by 48.2 trillion won on a year-on-year basis to reach 359 trillion won, equivalent to 33.8 percent of the gross domestic product (GDP). So we need to check the measures needed to keep the state debts at a proper level, as such a problem is directly related to the people’s livelihood.
Third, is the issue of the system for the execution of welfare budgets. As seen in the series of embezzlements by officials in charge of social welfare, it is important to set up a system so that the welfare budget can trickle down to the needy people. It is necessary to find solutions to problems within the government system in order to maximize the efficiency of the limited resources.
Fourth, is the issue of government performance management. From the year 2009, performance reports began to be submitted to the National Assembly to make the most of them for the assessment of the budget’s execution and settlement appraisal. Given the early stage of the execution of related policies, problems have been raised regarding the possible overly-generous assessment and the use of improper yardsticks during the appraisal. Fifth, is the need to check on the budget’s annual execution. To ensure the appropriateness of the budget’s execution, the National Assembly will also focus on possible waste and misuse of budget funds, including the overlapping of spending.
The total budget requested by the ministries for the fiscal year 2011 totals 312.9 trillion won, up 6.9 percent from a year earlier. The National Assembly is expected to focus on the following issues in the process of deliberation for the 2011 state budget:
First, they will focus on how to balance the envisioned expansion of the welfare budget and the securing of soundness in the state treasury. In view of the increasing need to cope with a rapidly aging society and the polarization of wealth, the ministries have asked for a total of 87.3 trillion won of budget for the next year. Legislators will likely focus on how to come up with an appropriate welfare budget in consideration of both increasing demand for welfare money and a deteriorating state budget.
Second, the National Assembly will also brainstorm on ways of finding solutions to the snowballing debts incurred by the provincial governments and state enterprises. The debts incurred by local governments amounted to 25.553 trillion won as of the end of 2009, registering a rapid growth rate of 32.9 percent on a year-on-year basis. Most state-run companies suffer from a serious debt problem including LH Corp., which has 118 trillion won of debt. As the possible insolvencies of provincial governments and state-run enterprises will be passed on to the people eventually, there has been a growing need to come up with measures to resolve the issues properly including strengthening financial regulations and financial assistance from the central government.
Third, there will be an in-depth discussion into the much-touted Four Rivers Project. The Ministry of Land, Transport and Maritime Affairs, the Ministry of Environment and the Ministry of Agriculture, Forestry and Food have requested 5.427 trillion won (with the exception of 3.8 trillion won asked for by the Korea Water Resources Corp). There have been calls from the provincial governments and the opposition parties for the amendment of the Four Rivers Project, so I expect the parties and government officials will find a reasonable solution to the issue.
Fourth, they will tackle the problem of expanding the national defense budget. The national defense budget will likely increase more sharply than the previous year given the imbalance in combat capabilities among the Army, Navy and Air Forces, as revealed with the sinking of the frigate Cheonan, alongside the need to effectively cope with a possible regional provocation. The Defense Ministry has asked for 31.610 trillion won for next year’s budget, up 6.9 percent from this year. I expect there will be a discussion of the budget for the purpose of increasing combat capabilities within the boundary of not undermining the state’s financial soundness.
Fifth, the policymakers will likely discuss ways of expanding budgets for the ordinary people. The government and the governing and opposition parties alike plan to expand support for the ordinary people by offering more jobs for youngsters, women, the elderly and the physically disabled. Toward that end, they will likely focus on the introduction of younger interns for small and medium companies, support for the raising of infants and kids, and scholarships for the low-income bracket. They need to put their priorities on the appropriate sectors with the proper budget, as there are many potential beneficiaries, yet limited resources.
There has been growing anxiety over the possibility that the National Assembly will give less focus to the budget deliberation process since the political parties will be focused on the G20 event slated for November. But the Budget Settlement Committee will step up efforts to conduct the deliberation and settlement works smoothly while clearing such concerns. I expect both governing and opposition parties will engage in reasonable and in-depth deliberation of the next year’s budget during the upcoming regular session of the National Assembly. nw
By Joo Young-jin, Senior Staff Director The Special Committee on Budget & Accounts The National Assembly
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