Korea plans W15tr extra budget

The government and the ruling party reached an agreement to set an extra budget of 15 trillion won ($13.3 billion) at their meeting Wednesday.

But the supplementary budget for the second half, pushed by the Finance Ministry, has faced criticism from opposition parties for its reckless use of taxpayers’ money.

Ruling Saenuri Party officials said Finance Minister Choi Kyung-hwan garnered consent from the party for the economic stimulus package.

They plan to propose the budget plan to the National Assembly by July 20 after undergoing a Cabinet approval.

The opposition New Politics Alliance for Democracy welcomed the extra budget itself in consideration of the Middle East respiratory syndrome outbreak and drought in many agricultural districts.

But the NPAD said in a statement that it would prevent the budget from being exploited as a tool to boost the economy.

Spokeswoman Lee Eon-joo predicted that it would take about two or three months for the government to inject funds into the damaged sectors, calling on the ministry to take detailed steps to support the MERS-hit industries and drought-hit farmers.

She stressed that opposition lawmakers will make a profound review of the budget plan in a bid to block spending of taxpayer money on the sectors, irrespective of the MERS virus and drought.

The party’s statement is based on the allegation that the ministry is set to use a certain portion of the money for reinforcing the economy in a reported effort to spur gross domestic product growth, which may stay below 3 percent this year.

The NPAD also said it would unveil its support measures for famers and recommendations on bolstering the state medical infrastructure.

In a news briefing, Rep. Kim Sung-tae of Saenuri said the government is pushing for fiscal expansion through state funds by minimizing the issuance of sovereign bonds not to undermine the fiscal soundness.

“To reduce risks, the planned scale (of 15 trillion won) is aimed at maximizing the stimulus within the possible capacity,” he said.

The Park Geun-hye administration drew up the supplementary budget worth 17.3 trillion won in 2013, making her the nation’s first president to seek a stimulus package of more than 10 trillion won twice her tenure.

The Finance Ministry’s recent decision to lower the GDP growth outlook from the earlier 3.8 percent to 3.1 percent is said to have reflected the coming fiscal expansion.

Analysts say this indicates that policymakers worry that the growth would sink below 3 percent unless there is a fiscal policy involving the extra budget.

By Kim Yon-se (kys@heraldcorp.com)