Analysis of the Second Installment of the Supplementary Budget Bill for 2020
Published on April 24, 2020
Published by Budget Analysis Coordination Division, Budget Analysis Department
With the global spread of COVID-19, the domestic and foreign real economies are shrinking rapidly, and concerns about the global economic recession are being raised. Recently, the IMF predicted that the world will experience the worst recession since the Great Depression of the 1930s this year, and forecasted the world's economic growth rate would tumble to -3.0%, with Korea's growth rate falling to -1.2%.
Currently, many people in Korea are also having difficulties due to sluggish domestic demand and job instabilities. Given Korea’s high degree of trade openness, the economic decline is likely to continue for a considerable period of time in the event of a global economic downturn. Accordingly, on April 16, the government submitted its Second Installment of the Supplementary Budget Bill for 2020 to the National Assembly in order to provide emergency relief payment to stabilize incomes and livelihoods, and boost consumption. This is the first time since 2003 that a supplementary budget bill has been submitted for a second installment in the same year, and it has been 30 days since the first installment of the supplementary budget bill was submitted on March 5 and confirmed by the National Assembly.
The increase in expenditures in the supplementary budget is about 7.6 trillion won, all of which will be towards emergency relief payment taken from state coffers. To raise this amount, the government loaned 1.2 trillion won from the funds, cut 3.6 trillion won from its expenditure projects, and shaved the Public Capital Management Fund's expenditures in the Foreign Exchange Equalization Fund by 2.8 trillion won.
The National Assembly Budget Office has published its, “Analysis of the Second Installment of the Supplementary Budget Bill for 2020” to support its in-depth review of the bill by the National Assembly. The gross volume analysis includes analysis of formulation requirements, financial resources, supplementary budget histories, and economic effects, etc. while emergency relief payment analysis contains a detailed analysis of international cases, funding targets, funding criteria, funding methods, and local matching funds.