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2019 ECONOMIC POLICIES
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3rd Supplementary Budget Proposal of 2020

  • DivisionBudget Office - Budget Policy Division
  • DateJune 3, 2020
  • Tel0442157130

3rd Supplementary Budget Proposal of 2020

 

3rd Extra Budget to Support Job Security and Korean New Deal

 

 

The government proposed a 3rd supplementary budget worth 35.3 trillion won to support employment and finance economic stimulus packages, as well as to make a revenue adjustment.

 

1. Third Supplementary Budget of 2020

 

1) Budget

 

35.3 trillion won = 11.4 trillion won (revenue adjustment) + 23.9 trillion won (new spending)

 

- Revenue adjustment:  11.4 trillion won

- Finance emergency support:  5.0 trillion won

- Improve job security and expand social safety nets:  9.4 trillion won

- Finance economic stimulus packages, including the Korean New Deal:  11.3 trillion won

 

2) Source of finance

 

- Spending restructuring:  10.1 trillion won

- Borrowings from public fund reserves:  1.4 trillion won

- Bond issuance:  23.8 trillion won

 

 

   

(trillion won, %)

 

2019

Original Budget

2020 Budget

Change (B-A)

Original¹

Supplementary (A)

Supplementary

(B)

Supplementary

(C)

Total Revenues

(y-o-y, %)

476.1

(6.5)

481.8

(1.2)

481.6

(1.2)

482.2

(1.3)

470.7

(-1.1)

-11.4

Total Expenditures

(y-o-y, %)

469.6

(9.5)

512.3

(9.1)

523.1

(11.4)

531.3

(13.1)

547.1

(16.5)

16.0

Consolidated Fiscal Balance

(% to GDP)

6.5

(0.3)

-30.5

(-1.5)

-41.5

(-2.1)

-48.9

(-2.5)

-76.4

(-4.0)

-27.4

(-1.5%p)

Consolidated Fiscal Balance without Funds

(% to GDP)

-37.6

(-1.9)

-71.5

(-3.5)

-82.0

(-4.1)

-89.4

(-4.5)

-112.2

(-5.8)

-22.7

(-1.3%p)

Government Debt

(% to GDP)

740.8

(37.1)

805.2

(39.8)

815.5

(41.2)

819.0

(41.4)

840.2

(43.7)

21.2

(2.3%p)

Government Debt Growth from 2019

32.6

64.4

74.7

78.2

99.4

 

 

  ​​​​​​2. New Spending (23.9 trillion won)

 

1) Support marginal firms and finance job retention programs (5.0 trillion won)

 

The budget will be used to support business emergency packages designed to help retain employees and provide reliefs for small businesses.

 

- 1.9 trillion won to finance the 40 trillion won worth of emergency funds for SMEs and small businesses

- 3.1 trillion won to finance the 42.1 trillion won worth of key industry support funds:  financial market support funds (0.32 trillion won), the Special Purpose Vehicle to buy corporate bonds (1 trillion won), P-CBOs to help COVID-19 hit companies (1.43 trillion won), and corporate bond purchasing programs (0.35 trillion won)

 

2) Improve job security and expand social safety nets (9.4 trillion won)

 

- 8.9 trillion won to improve job security:  Expand wage support to help businesses retain jobs and create over 550,000 jobs in the public sector, including remote jobs and digital jobs for young adults

- 0.5 trillion won to expand social safety nets, such as by increasing household emergency reliefs, microcredit and affordable housing

 

3) Help revive the economy (11.3 trillion won)

 

Spend 3.7 trillion won to boost consumption, exports and local economies

 

- Promote consumption:  Issue coupons and local market gift certificates, expand the 10 percent refund program to promote the purchase of energy-efficient home appliances, and work on the Art New Deal, a visual art project funded by the government

- Promote investment:  Provide reshoring incentives, including the incentives given to companies with FDI

- Support local economies:  Build shopping places in old industrial complexes, and help key local industries, such as auto manufacturing, shipbuilding and aircraft part manufacturing

- Help exporters:  Invest in Korea Trade Insurance Cooperation to finance the export emergency package worth over 36 trillion won

- Promote smart manufacturing in SMEs (8 billion won), as well as smart business transactions in small businesses

 

Spend 5.1 trillion won on the Korean New Deal

 

Korean New Deal (5.1 trillion won) = Digital New Deal (2.7 trillion won) + Green New Deal (1.4 trillion won) + Job Security (1.0 trillion won)

 

Digital New Deal: 2.7 trillion won

1. Develop Data, Networks and AI

1.3 trillion won

  • Build big data platforms
  • Improve public administration networks with 5G and cloud computing
  • Promote industrial convergence with 5G and AI
  • Develop human resources in AI and SW

(0.56 trillion won)

(0.05 trillion won)

(0.66 trillion won)

(0.04 trillion won)

2. Digital inclusiveness and data protection

0.14 trillion won

  • Set up high-speed internet in remote villages and WiFi in public facilities
  • Establish a data protection system for Korea

(0.11 trillion won)

(0.03 trillion won)

3. Promote ‘smart working and doing business remotely’

0.75 trillion won

  • Build remote learning infrastructure for primary and secondary education, including high-speed WiFi in classrooms and textbooks on tablets
  • Promote remote leaning for college education and job training
  • Promote remote diagnosis of infectious diseases and smart healthcare
  • Provide 160,000 SMEs with smart working solutions

(0.25 trillion won)

 

(0.06 trillion won)

(0.12 trillion won)

(0.31 trillion won)

4. Make SOC smart

0.48 trillion won

  • Work on smart management of utilities and transportation
  • Promote smart cities, industrial parks and logistics

(0.44 trillion won)

(0.03 trillion won)

Green New Deal: 1.4 trillion won

1. Eco-friendly management of cities and infrastructure

0.37 trillion won

  • Make public facilities energy-efficient, including public schools and daycare centers*
  • Invest to solve urban problems, such as fine dust and water shortage
  • Build a smart clean water management system

(0.32 trillion won)

 

(0.01 trillion won)

(0.04 trillion won)

2. Promote green industries and eco-friendly manufacturing

0.48 trillion won

  • Develop 100 green enterprises, as well as 5 green industries
  • Promote eco-friendly manufacturing by building a low-carbon eco-friendly industrial complex

(0.45 trillion won)

(0.04 trillion won)

3. Promote low-carbon and distributed generation

0.58 trillion won

  • Build smart grids
  • Promote new renewable energy production
  • Replace old public vehicles with eco-friendly ones

(0.06 trillion won)

(0.39 trillion won)

(0.13 trillion won)

Improve job security: 1.0 trillion won

  • Expand the job safety net to all workers
  • Support those remaining outside the employment insurance system
  • Improve job training programs to reflect demand in the future
  • Improve workplace safety and work environment
  • Create internship opportunities for young adults and offer retraining programs for the middle-aged

        -

(0.58 trillion won)

(0.07 trillion won)

(0.11 trillion won)

(0.24 trillion won)

* The Green-Smart School project, which will transform 55 public schools and daycare centers to be energy-efficient and eco-friendly, as well as smart.

 

Spend 2.5 trillion won on further developing the K COVID-19 response model

 

- Improve the K COVID-19 response model with expanded diagnostic and treatment facilities, and smart medical centers

- Promote the development of treatments and vaccines

- Work for the country’s 3T COVID-19 response model of test-trace-treatment to be recognized as a global standard, and increase the ODA of K COVID-19 response kits and tools

 

3. Spending restructuring (10.1 trillion won)

 

10.1 trillion won = 9.2 trillion won (spending restructuring) + 0.9 trillion won (borrowings from social security funds)

 

- Reprioritize government projects (3.7 trillion won)

- Cut 10 percent of second-half operating expenses of the government and state-owned institutions (0.2 trillion won)

- Transfer funds which will otherwise be deposited in the FX Stabilization Fund (1.2 trillion won)

- Borrow from public funds (0.9 trillion won)

- Save local government subsidies as they will be paid with the revenue gap budget (4.1 trillion won)

 

Please refer to the attached pdf

 


 

Ministry of Economy and Finance
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