2020 Budget Proposal
2020 Budget Planned to Support Industry and Innovation
The government proposed an expanded budget for 2020, worth 513.5 trillion won, with its focus on boosting the economy and promoting innovation. Total expenditures will be increased by 43.9 trillion won, or 9.3 percent, compared with the 2019 budget.
The 2019-2023 fiscal management plan has been drawn up to secure fiscal soundness and continue to pursue innovation and inclusiveness.
I. 2020 Budget Proposal
1. Key Policies
- Promote innovation, increasing R&D budgets to 24.1 trillion won
- Boost exports, investment and consumption
- Strengthen social safety nets
- Improve the quality of citizen life
- Strengthen national defense and diplomacy
2. Key Features
(Total Revenues) The government revenues are projected to be 482.0 trillion won, an increase of 1.2 percent compared with 2019, growing slowly due to the weak semiconductor industry and fiscal decentralization.
(Total Expenditures) The total government expenditures will be 513.5 trillion won, an increase of 9.3 percent from the previous year.
(trillion won, %)
|
|
2019 Budget
|
2020 Budget Proposal (B)
|
Changes
|
|
Original (A)
|
Supplementary
|
B-A
|
%
|
|
Total Government Revenues
|
476.1
294.8
|
476.4
294.8
|
482.0
292.0
|
5.9
-2.8
|
1.2
-0.9
|
|
Total Government Expenditures
|
469.6
|
475.4
|
513.5
|
43.9
|
9.3
|
(Fiscal Balance) Deficits in the consolidated fiscal balance will rise compared with 2019 from 1.9 percent to GDP to 3.6 percent.
(Government Debt) Government debt is expected to rise compared with 2019 from 37.1 percent to GDP to 39.8 percent. Treasuries to fund deficits will grow from 33.8 trillion won in 2019 to 60.2 trillion won.
(trillion won, %)
|
|
2019 Budget
|
2020 Budget Proposal (B)
|
Changes
(B-A)
|
|
Original (A)
|
Supplementary
|
|
Consolidated Fiscal Balance
(% to GDP)
|
-37.6
(-1.9)
|
-42.3
(-2.2)
|
-72.1
(-3.6)
|
-34.5
(-1.7%p)
|
|
Government Debt
(% to GDP)
|
740.8
(37.1)
|
731.5
(37.2)
|
805.5
(39.8)
|
64.7
(2.7%p)
|
Budgets by area
(trillion won)
|
|
2019 Budget (A)
|
2020 Budget Proposal (B)
|
Change
|
|
(B-A)
|
%
|
|
Total Expenditures
|
469.6
|
513.5
|
43.9
|
9.3
|
|
1. Health, Welfare, Employment
- Job creation
|
161.0
21.2
|
181.6
25.8
|
20.6
4.5
|
12.8
21.3
|
|
2. Education
- Grants to local governments
|
70.6
55.2
|
72.5
55.5
|
1.8
0.2
|
2.6
0.4
|
|
3. Culture, Sports, Tourism
|
7.2
|
8.0
|
0.7
|
9.9
|
|
4. Environment
|
7.4
|
8.8
|
1.4
|
19.3
|
|
5. R&D
|
20.5
|
24.1
|
3.6
|
17.3
|
|
6. Industry, SME, Energy
|
18.8
|
23.9
|
5.2
|
27.5
|
|
7. SOC
|
19.8
|
22.3
|
2.6
|
12.9
|
|
8. Agriculture & Forestry, Fishery, Food
|
20.0
|
21.0
|
0.9
|
4.7
|
|
9. National defense
|
46.7
|
50.2
|
3.5
|
7.4
|
|
10. Diplomacy, Reunification
|
5.1
|
5.5
|
0.5
|
9.2
|
|
11. Social order, Safety
|
20.1
|
20.9
|
0.8
|
4.0
|
|
12. Public administration, Local governments
- Grants to local governments
|
76.6
52.5
|
80.5
52.3
|
3.9
-0.2
|
5.1
-0.3
|
3. Budget Proposal by Initiative
Promote innovation
1) Spend a total of 2.1 trillion won to support the development of high tech materials, parts and manufacturing equipment
- Increase R&D budgets for strategic materials, parts and manufacturing equipment from 0.6 trillion won to 1.3 trillion won: The budgets are mostly allocated to the 100 items most important for the manufacturing of six major products, such as semiconductors, display panels and automobiles, with a 118.6 billion won worth of SME R&D budget newly added to help suppliers working with manufacturers on R&Ds of those items
- Spend 0.5 trillion won, an increase from 0.2 trillion won, to help commercialize R&D outcomes as fast as possible
- Newly provide 0.4 trillion won worth of R&D and facility investment funds for parts and materials, making them a total of 1.6 trillion won
- Prepare for an emergency by increasing contingency funds by 0.5 trillion won, and create a temporary special account to effectively manage funds
2) Invest a total of 4.7 trillion won in 3 high tech infrastructures of data, networks and AI, and 3 high tech industries of a system on a chip, bio-health and future cars
- Invest 1.7 trillion won in improving data platforms, developing AI technologies and promoting industrial convergence with 5G
- Invest 3.0 trillion won to help develop a system on a chip, bio-health and future cars
3) Invest 0.6 trillion won to develop the workforce qualified for future industries
- Increase graduate programs for AI education, and work to grow AI and SW specialists
- Provide education support to technology majors (6,400 students)
4) Invest in college reform
- Increase investment to reform college programs into ones growing future workforce
- Expand support for vocational colleges for them to provide professional job training and retraining
5) Work for the 2nd venture boom
- Invest 1.0 trillion won in the fund of venture capital funds, making them 2.5 trillion won
- Expand the scale-up support to 750 startups, and launch a new support for high tech startups
- Expand the tech incubator program for startups (TIPS) to 300 companies and post-TIPS to 40 companies
Boost exports, investment and consumption
- Provide exporters with a total of over 4 trillion won worth of trade financing, which includes government investment of 0.6 trillion won in the Export/import Bank of Korea and Korea Trade Insurance Corporation, to help them diversify markets and participate in infrastructure projects in high risk countries
- Increase corporate support funds to more than 20 trillion won, including 1.3 trillion won of fiscal investment, to help with facilities investment and business operation
- Invest 0.4 trillion won in smart factories for the target of 30,000 smart factories to be reached by 2022, build data centers for smart manufacturing and set up 2 more smart manufacturing complexes, making them a total of 4
- Invest in the three kinds of projects to stimulate local economies: 10.4 trillion won worth of investment in community SOC projects, 0.5 trillion won worth of investment in the 33 projects for balanced development of the country, and 61.5 billion won worth of investment in the 7 regulatory free zones to help them attract new and innovative businesses
- Increase job creation budgets by 21.3 percent to 25.8 trillion won, and support the active labor market policies, such as by funding job training programs
Strengthen social safety nets
- Increase support for low-income households and the physically vulnerable: The family supporter requirements for basic social security benefits not to be applied to households with the physically vulnerable, working age recipients of basic social security benefits (aged 25 to 64) to receive an earned income reduction of 30 percent, and family supporters of basic social security recipient households to be given a 50 percent cut in asset-income conversion
- Adopt a national employment support system to cover those outside the unemployment insurance, according to which up to 500,000 won per month will be given to 200,000 job seekers for 6 months
- Spend 0.7 trillion won to expand free education to all high school students, and keep the special account for daycare support until 2022
- Address low birth: Introduce support for extended daycare, increase public daycare centers and workplace daycare centers, and make hourly service available at 690 daycare centers
- Address ageing population: Raise basic pension benefits from 250,000 won to 300,000 won, increase elderly jobs by 130,000, 50 percent of which will be yearly jobs, and spend 0.4 trillion won to improve the current senior care service into one integrated service in which 17 kinds of services are provided according to the demand
- Strengthen support for small merchants: Increase the small merchant loans by 0.3 trillion won and special guarantees provided by local government’s credit guarantee insurance funds by 5 trillion won, help with online sales, such as entering internet shopping malls and personal broadcasting, and increase the issuance of traditional market gift certificates by 1.0 trillion won
- Strengthen housing support for young adults: Provide 29,000 rental homes in near-station areas, and increase the low interest rate loans for key money deposits by 1.8 trillion won
- Strengthen employment support for young adults: Increase SME incentives for hiring young adults from 200,000 employees to 290,000 employees, make the asset building account for young adults available to 350,000 young adults, in which government provides 300,000 won of matching funds for every 100,000 won deposited by account holders, and provide 32,000 high school graduates with work-study incentives worth 4 million won to encourage qualified high school graduates to start working
Work on better quality of life
- Invest 1.2 trillion won in smart infrastructure, an increase from 0.3 trillion won: Spend 0.4 trillion won on smart drinking water management, 0.4 trillion won on smart transportation management and 0.3 trillion won to promote smart cities
- Increase spending to improve old infrastructure, such as old railways, stations and drinking water management systems
- Increase spending on fine dust reduction from 2.3 trillion won to 4.0 trillion won to reach the reduction target by 2021, one year before the set date
- Increase the support for National Health Insurance by 1.1 trillion won to 9.0 trillion won: Supports to be focused on disease prevention and early treatment, with hepatitis A vaccination newly covered
Strengthen national defense and diplomacy
- Increase national defense spending to 50.2 trillion won to acquire high tech defense systems and build next generation submarines
- Spend 3.9 trillion won on defense R&D, and work on high-tech military training programs
- Raise the reserve force pay by 33 percent, meal costs by 6 percent and yearly allowance to 100,000 won
- Increase spending on public diplomacy
- Increase ODA budgets by 11.4 percent to 3.5 trillion won, reflecting the administration’s policies to expand cooperation with Southeast Asian countries
II. 2019-2023 National Fiscal Management Plan
1. Key Policies
- Fiscal resources management will be focused on innovation and inclusiveness: The government will work to prepare for the future, such as accelerating innovation and changing demography, as well as to boost the economy. Inclusiveness will be pursued through stronger social safety nets and job security, efforts being made to improve the quality of life, such as through fine dust reduction and community SOC projects.
- The government will work to ensure fiscal sustainability through spending restructuring and a broader tax base.
- The government will work on innovation in the public procurement system to stimulate technology development and help increase industrial competitiveness, and will build a next generation budget and accounting system, which integrates fiscal, economic and administrative data.
2. Mid-term Fiscal Outlook and Fiscal Management Goals
- Total government revenues are projected to increase at an average of 3.9 percent every year in 2019-2023.
- Total government expenditures will be managed to increase at an average of 6.5 percent every year in 2019-2023.
Mid-term Outlook for Government Revenues and Expenditures
(trillion won, %)
|
|
2019
|
2020
|
2021
|
2022
|
2023
|
Annual growth (%)
|
|
original
|
supplementary
|
|
Total Government Revenues
- Tax Revenues
|
476.1
294.8
|
476.4
-
|
482.0
292.0
|
505.6
304.9
|
529.2
320.5
|
554.5
336.5
|
3.9
3.4
|
|
Total Government Expenditures
(growth, %)
|
469.6
(9.5)
|
475.4
(10.9)
|
513.5
(9.3)
|
546.8
(6.5)
|
575.3
(5.2)
|
604.0
(5.0)
|
6.5
|
- The consolidated fiscal balance minus social security funds will post a deficit to GDP in the mid-3 percent range in 2019-2023.
- Government debt will be managed in the mid-40 percent range to GDP.
Mid-term Outlook for Fiscal Balance and Government Debt
(trillion won, %)
|
|
2019¹
|
2020
|
2021
|
2022
|
2023
|
|
Consolidate Fiscal Balance minus Social Security
(% to GDP)
|
-37.6
(-1.9)
|
-72.1
(-3.6)
|
-81.8
(-3.9)
|
-85.6
(-3.9)
|
-90.2
(-3.9)
|
|
Government Debt
(% to GDP)
|
740.8
(37.1)
|
805.5
(39.8)
|
887.6
(42.1)
|
970.6
(44.2)
|
1,061.3
(46.4)
|
1. The 2019 figures excludes the supplementary budget
3. Restructure Fiscal Management
- Strictly manage fiscal soundness: Reform the fiscal project evaluation system, work to broaden the tax base, such as by ending unnecessary tax breaks and avoiding tax evasion, and work on long-term fiscal outlooks
- Improve the fiscal management system: Revise the public procurement system in a way to promote industrial innovation and technology development, and build a next generation budget and accounting system which provides information integration
- Work for local governments to take on increased fiscal responsibility
2019-2023 Budget Allocation Plans by area
(trillion won, %)
|
|
2019
|
2020
|
2021
|
2022
|
2023
|
Average growth (%)
|
|
Total Expenditures
(growth, %)
|
469.6
(9.5)
|
513.5
(9.3)
|
546.8
(6.5)
|
575.3
(5.2)
|
604.0
(5.0)
|
(6.5)
|
|
Health, Welfare, Employment
(growth, %)
|
161.0
(11.3)
|
181.6
(12.8)
|
198.4
(9.3)
|
213.2
(7.4)
|
229.1
(7.5)
|
(9.2)
|
|
Education
(growth, %)
|
70.6
(10.1)
|
72.5
(2.6)
|
76.0
(4.9)
|
79.1
(4.1)
|
82.0
(3.5)
|
(3.8)
|
|
Culture, Sports, Tourism
(growth, %)
|
7.2
(12.2)
|
8.0
(9.9)
|
8.3
(4.6)
|
8.6
(3.8)
|
9.0
(3.6)
|
(5.4)
|
|
Environment
(growth, %)
|
7.4
(7.2)
|
8.8
(19.3)
|
9.6
(8.5)
|
10.1
(5.8)
|
10.6
(4.2)
|
(9.3)
|
|
R&D
(growth, %)
|
20.5
(4.4)
|
24.1
(17.3)
|
26.7
(10.7)
|
28.7
(7.7)
|
30.9
(7.6)
|
(10.8)
|
|
Industry, SME, Energy
(growth, %)
|
18.8
(15.4)
|
23.9
(27.5)
|
26.4
(10.3)
|
28.0
(6.1)
|
29.9
(6.9)
|
(12.4)
|
|
SOC
(growth, %)
|
19.8
(4.0)
|
22.3
(12.9)
|
23.4
(4.9)
|
23.7
(1.4)
|
23.7
(-0.3)
|
(4.6)
|
|
Agriculture & Forestry, Fishery, Food
(growth, %)
|
20.0
(1.5)
|
21.0
(4.7)
|
21.5
(2.3)
|
21.9
(1.9)
|
22.2
(1.6)
|
(2.6)
|
|
National Defense
(growth, %)
|
46.7
(8.2)
|
50.2
(7.4)
|
53.4
(6.5)
|
56.4
(5.7)
|
59.5
(5.4)
|
(6.2)
|
|
Diplomacy, Reunification
(growth, %)
|
5.1
(7.2)
|
5.5
(9.2)
|
5.9
(6.2)
|
6.3
(6.5)
|
6.6
(5.6)
|
(6.9)
|
|
Social order, Safety
(growth, %)
|
20.1
(5.6)
|
20.9
(4.0)
|
21.8
(4.2)
|
22.7
(3.9)
|
23.5
(3.7)
|
(4.0)
|
|
Public administration, Local governments
(growth, %)
|
76.6
(11.0)
|
80.5
(5.1)
|
82.4
(2.4)
|
84.3
(2.3)
|
86.1
(2.2)
|
(3.0)
|
III. Future Plans
The 2020 budget proposal and the 2019-2023 National Fiscal Management Plan will be submitted to the National Assembly on September 3, after proceeding through the Cabinet Meeting on August 29.
Please refer to the attached pdf
