NABO Fiscal Trends and Issues (Winter Edition)
I. Key Fiscal Indicators
The progress rates of total revenue and total expenditure up to November 2017 are 94.4% and 90.2%, respectively. Also, although the consolidated central government balance (a 29.2 trillion Korean won surplus) improved by 8.2 trillion won YoY thanks to the increase in total revenue up to November 2017, central government debt (634.2 trillion won) increased by 42.2 trillion won since the end of 2016, due to reasons such as increased treasury bond issues.
Ⅱ. [Special Report] An Analysis of Major Fiscal Issues
As major fiscal issues of the fourth quarter of 2017, the Contents of the Confirmed 2018 Budget (details about the National Assembly deliberation and items that were increased or decreased) are introduced, and analyses were made on the “Housing Welfare” Roadmap for creating a housing ladder—through which a household may progress from renting to owning a house—that may lead to social consolidation, as well as the status of and challenges to innovative growth.
According to the National Assembly’s deliberation on the budget plan and fund management plan for 2018, 4 trillion 425.1 billion Korean won was cut from 469 programs, 4 trillion 187.7 billion won was raised for 831 programs and a total of 74 supplementary comments were annexed. The key programs with budget reductions and increases are introduced in detail along with some major supplementary comments.
The government announced the Housing Welfare Roadmap, a plan to supply 850,000 low-rent apartments as well as 150,000 first-time sales to the public over the next five years. This report recommends the need to develop a long-term supply plan by taking into account rental demand, and also analyze how this plan may affect the fiscal soundness of the Korea Housing & Urban Guarantee Corporation.
As the government’s top objectives for its 2018 economic policy are quality jobs and income-led growth, a fair economy and innovative growth, this report introduces the current status of the fiscal programs related to innovative growth along with the recommendation that a clear definition of the concept of ‘innovative growth’should be made for each program to be pursued in a consistent manner.
Ⅲ. Major Fiscal Issues
Regarding the fiscal issues of the fourth quarter of 2017, unique fiscal programs announced by the government are introduced, including Ways to Boost the Social Economy, along with comments regarding their analyses.
An overview as well as analyses were made of policies such as the improvement of university evaluation and pursuing a restructuring of government-financed programs; the announcement of Innovative Growth Strategies for the Research Industry, labor cost and social security contribution support for companies vulnerable to the minimum wage raise, the relaxation of the family support obligation for eligible candidates of the National Basic Living Security, strengthening regional trauma centers, as well as market stabilization measures to stabilize the supply-and-demand of rice.
Ⅳ. Overseas Fiscal Trends
The fiscal trends in major countries are introduced including an overview and key points of the European Council’s EU Budget for 2018, the US’ discussion on lifting the budget sequestration and Japan’s confirmed budget for 2018.