Analysis of the 4th Supplementary Budget Plan for 2020
Published on 16 September 2020
Published by Budget Analysis Coordination Division
On September 11th, the government submitted to the National Assembly the 4th Supplementary Budget Plan for 2020, amounting to 7.8 trillion won, to support the social classes affected by the deteriorated economy and aggravated living conditions stemming from the resurgence of COVID-19. This is the first time since 1961 for a supplementary budget plan to be submitted for the fourth time in one year, with a record cumulative volume of 66.8 trillion won. The unprecedented scale of bold fiscal expansion is evidence of how serious the government views the economic shock incurred by COVID-19.
The supplementary budget plan consists of four packages based on eligibility, with consideration given to the contraction in private economic activity due to the recently reinforced social distancing measures. 3.8 trillion won is for micro enterprises and SMEs, 1.4 trillion won is to be spent on an employment security package for the working class at high risk of being laid off, 0.4 trillion won is to provide emergency living expense support for the low-income class and 2.2 trillion won is to be spent on emergency “Dolbom” childcare services for parents in urgent need.
Meanwhile, 7.5 trillion won of this supplementary budget plan is sourced from issuing government bonds and 0.3 trillion won by issuing SME Promotion Bonds. Consequently, the operating fiscal balance is expected to run up a deficit of 118.6 trillion won, 7.1 trillion won higher than the third supplementary budget, and government debt is expected to total 846.9 trillion won, which represents 43.9% of GDP.
NABO published the Report on the Analysis of the 4th Supplementary Budget Plan for 2020 in order to support the National Assembly’s examination of the supplementary budget plan. This report is composed of two chapters. Chapter 1 features an analysis of the plan’s allocation conditions, financing resources, fiscal soundness and economic conditions; whereas Chapter 2 provides an in-depth analysis of the urgency, necessity, and possibility of execution within the current year as well as the effectiveness of individual programs allocated to each government ministry.