2021 Budget Proposal
2021 Budget Drawn up to Speed up Turnaround and
Prepare for the Future
The government proposed a 555.8 trillion won worth of budget for 2021 with its focus on speeding up economic recovery and supporting the Korean New Deal. Total expenditures will be increased by 43.5 trillion won, or 8.5 percent, compared with the 2020 original budget, or by 8.9 trillion won, or 1.6 percent from the final budget which includes three supplementary budgets.
The 2020-2024 fiscal management plan has been drawn up to secure fiscal sustainability and continue to pursue innovation and inclusiveness.
I. 2021 Budget Proposal
1. Key Policies
- Support the Korean New Deal
- Speed up economic turnaround
- Develop future growth engines
- Promote inclusive labor market and strengthen social safety nets
- Provide secure and clean environment
- Restructure discretionary spending
2. Key Features
(Total Revenues) The government revenues are projected to be 483.0 trillion won, an increase of 1.2 percent compared with 2020. Tax revenues declined 9.2 trillion won due to a fall in corporate taxes and nontax revenues rose 10.4 trillion won as social security contributions increased.
(Total Expenditures) The total government expenditures will be 555.8 trillion won, an increase of 43.5 trillion won, or 8.5 percent from the previous year.
(trillion won, %)
|
|
2020 Budget
|
2021 Budget Proposal (C)
|
Changes
|
|
Original (A)
|
Supplementary
(B)
|
C-A
|
C-B
|
|
Total Government Revenues
|
481.1
292.0
|
470.7
279.7
|
483.0
282.8
|
1.2 (0.3%)
-9.2 (-3.1%)
|
12.3 (2.6%)
3.1 (1.1%)
|
|
Total Government Expenditures
|
512.3
|
546.9
|
555.8
|
43.5 (8.5%)
|
8.9 (1.6%)
|
(Fiscal Balance) Deficits in the consolidated fiscal balance will rise compared with 2020 from 3.5 percent to GDP to 5.4 percent.
(Government Debt) Government debt is expected to rise compared with 2020 from 39.8 percent to GDP to 46.7 percent.
(trillion won, %)
|
|
2020 Budget
|
2021 Budget Proposal (C)
|
Changes
|
|
Original (A)
|
Supplementary (B)
|
C-A
|
C-B
|
|
Consolidated Fiscal Balance
(% to GDP)
|
-71.5
(-3.5)
|
-111.5
(-5.8)
|
-109.7
(-5.4)
|
-38.2
(-1.9%p)
|
1.8
(0.4%p)
|
|
Government Debt
(% to GDP)
|
805.2
(39.8)
|
839.4
(43.5)
|
945.0
(46.7)
|
139.8
(6.9%p)
|
105.6
(3.2%p)
|
Budgets by area
(trillion won)
|
|
2020 Budget (A)
|
2021 Budget Proposal (B)
|
Changes
|
|
B-A
|
B-A (%)
|
|
Total Expenditures
|
512.3
|
555.8
|
43.5
|
8.5
|
|
1. Health, Welfare, Employment
- Job creation
|
180.5
25.5
|
199.9
30.6
|
19.4
5.1
|
10.7
20.0
|
|
2. Education
- Grants to local governments
|
72.6
55.4
|
71.0
53.3
|
-1.6
-2.1
|
-2.2
-3.7
|
|
3. Culture, Sports, Tourism
|
8.0
|
8.4
|
0.4
|
5.1
|
|
4. Environment
|
9.0
|
10.5
|
1.5
|
16.7
|
|
5. R&D
|
24.2
|
27.2
|
3.0
|
12.3
|
|
6. Industry, SME, Energy
|
23.7
|
29.1
|
5.4
|
22.9
|
|
7. SOC
|
23.2
|
26.0
|
2.8
|
11.9
|
|
8. Agriculture & Forestry, Fishery, Food
|
21.5
|
22.4
|
0.9
|
4.0
|
|
9. National defense
|
50.2
|
52.9
|
2.7
|
5.5
|
|
10. Diplomacy, Reunification
|
5.5
|
5.7
|
0.2
|
4.3
|
|
11. Social order, Safety
|
20.8
|
21.8
|
1.0
|
4.4
|
|
12. Public administration, Local governments
- Grants to local governments
|
79.0
52.2
|
86.5
51.8
|
7.5
-0.4
|
9.5
-0.8
|
* We have increased industrial, environment and R&D budgets by two digit percent, as well as employment and SOC budgets.
3. Spending restructuring
We have restructured spending to increase fiscal spending efficiency.
- Restructure around 10 percent of discretionary spending: Re-prioritize investment and increase budgets for Korean New Deal projects
- Cut public sector operation expenses by more than five percent
- Cut similar or overlapped projects through inter-ministerial cooperation and revamp ministerial level projects into 12 key projects, such as developing digital workforce, opening up data, speeding up a hydrogen economy, growing new industries (bio-health, future cars, system on a chip and high tech materials), building green and smart schools, preventing child abuse and innovating industrial complexes
4. Budget Proposal by Initiative
10 key projects worth 160 trillion won
1) Korean New Deal projects (21.3 trillion won)
2) Job retention and creation (8.6 trillion won)
3) Stimulate as much as 20 trillion won worth of consumption (1.8 trillion won)
4) Innovative cities, preparation for rural depopulation and other projects for balanced development of the country (16.6 trillion won)
5) New deal investment funds (1.0 trillion won)
6) SMEs, ventures and new growth engines (33.9 trillion won)
7) Young adult supports including jobs, housing, personal financial management and training (20.7 trillion won)
8) Social safety nets in the four area of basic livelihood, healthcare, housing and education (46.9 trillion won)
9) K-disease prevention, natural disaster control and other safety programs (7.1 trillion won)
10) Green and clean environment (3.0 trillion won)
Korean New Deal
- A total of 21.3 trillion won to be invested over 2021, creating 360,000 jobs
- Eighty percent of the budget to be invested in the ten major projects (11.6 trillion won) and eight projects to improve worker safety nets, retraining and digital access (5.4 trillion won)
- Digital New Deal: 7.9 trillion won over 2021 and 44.8 trillion won by 2025
- Green New Deal: 8.0 trillion won over 2021 and 42.7 trillion won by 2025
- Social safety nets and human resources development: 5.4 trillion won over 2021 and 26.6 trillion won by 2025
10 key Korean New Deal projects: 11.6 trillion won to be invested over 2021 and a total of 68.7 trillion won by 2025
1) Data dam (2.8 trillion won over 2021 and a total of 15.5 trillion won by 2025): Promote the use of AI across the industry, including new growth engines, content industries and tourism
2) AI government (0.8 trillion won over 2021 and a total of 9.7 trillion won by 2025): Provide smart public services, improve security through blockchain technology and adopt cloud computing
3) Smart healthcare infrastructure (60 billion won over 2021 and a total of 100 billion won by 2025): Build more centers for AI-based respiratory disease control and prevention
4) Green and smart schools (0.1 trillion won over 2021 and a total of 3.4 trillion won by 2025): Improve K-12 education to be digitalized and the schools to be environment-friendly
5) Digital twin (0.3 trillion won over 2021 and a total of 1.5 trillion won by 2025): Produce detailed road maps for driverless cars by 2022, and build 3D maps for underground utility facilities, as well as a digital twin-based disaster control system
6) Smart SOC (2.4 trillion won over 2021 and a total of 10.0 trillion won by 2025): Make smart transportation systems and water-gate management for flood protection, as well as adopt noncontact ID recognition in airports
7) Smart and green industrial complexes (0.7 trillion won over 2021 and a total of 3.2 trillion won by 2025): Set up an ICT-based integrated energy management system and reduce fine dust
8) Green remodeling (0.7 trillion won over 2021 and a total of 3.0 trillion won by 2025): Transform public buildings into zero energy ones, and underground power and communications lines in school zones
9) Green energy (1.3 trillion won over 2021 and a total of 9.2 trillion won by 2025): Promote wind, solar and hydrogen power generation
10) Eco-friendly future mobility (2.4 trillion won over 2021 and a total of 13.1 trillion won by 2025): Supply electric and hydrogen fuel-cell cars of 116,000 and support the early scrapping of old cars, and promote the transforming of vessels into eco-friendly ones
Four major areas of investment
1) Boost economic turnaround: Invest in job retention and creation, as well as in increasing domestic demand
Job retention and creation (8.6 trillion won)
- Private sector jobs: Programs to encourage young adults to enter the job market, such as employee incentives and startup support programs, programs for the middle-aged workers, such as re-employee benefits, job trainee support and consulting services to help return to work and start businesses, and programs for small businesses, such as training programs and support for online sales
- Public sector jobs: 1.03 million jobs for the elderly and disabled
Boost consumption (1.2 trillion won)
- Vouchers worth 0.5 trillion won to stimulate 2 trillion won worth of consumption
- 1.3 trillion won worth of support to provide discount for 18 trillion won worth of local gift certificates
- Tourism support to encourage the development of new programs
Promote investment (65.9 trillion won)
- Promote private sector investment (39.9 trillion won): Support for investment funds which invest in Korean New Deal projects, loans to support high tech manufacturing facilities and guarantees to help noncontact businesses, SMEs and exporters
- Ventures and startups (5.8 trillion won): Help create a favorable environment for ventures from financing to commercialization
- Reshoring and FDI (0.2 trillion won): Increase incentives, expand on-site support, make joint investment in R&D centers and living accommodations to attract foreign talents, and increase support for global joint projects
- SOC and other public investment (26.0 trillion won): Improve transportation and logistics systems, and build smart buildings, zero energy buildings, smart cities and smart SOC, including an ITS, noncontact ID recognition, intelligent water management system and early disaster warning system
- Old infrastructure (6.0 trillion won): Invest in old roads, rails and river management systems
Boost exports (1.2 trillion won)
- 0.6 trillion won support for the 5.8 trillion won worth of export financing
- Marketing support through vouchers and with IT technologies, including those needed to sell products on global online marketplaces
- Promote diversifying markets and items
Invest for balanced development of the country (16.6 trillion won)
- Invest in local development projects, such as large transportation projects and local industrial development projects, innovative city projects and community SOC projects
- Promote local economies: Develop local talents that match the local industrial demand, and develop region-specific industries, including tourism
- Prevent rural depopulation: Provide young farmer packages and work on renewal programs
- Make up for the local government subsidy cut through the purchases of local government bonds and other special account projects
2) Develop future growth engines: Invest in R&D, high technologies (data, network and AI), promising future industries of BIG 3 (a system on a chip, future cars and biohealth), green industries and major manufacturing
Create innovation-friendly environment in such areas as R&D, human resources development, finance and government procurement (29.6 trillion won)
- Increase investment in R&D (27.2 trillion won): Around 70 percent of the government R&D investment to go to the Korean New Deal, high-tech manufacturing supplies, BIG 3, core technology R&D and human resources development
- Develop AI and SW talents through integrated education programs across universities and training programs jointly developed by industries and universities
- Innovative financing: Invest 2.1 trillion won in the 7 trillion won worth of venture funds that will finance digital and green new deal projects
- Public procurement: Increase budgets for innovative product purchases
Develop future growth engines (7.1 trillion won)
- Data, network and AI: Invest 3.1 trillion won in the building and opening up of databases, promote the use of 5G, such as through integrated services and high quality contents, and support the development of core technologies for AI and the use of AI
- BIG 3: Expand the investment in a system on a chip to help develop core technologies and professional workforce, invest for driverless cars to be in commercial use in 2024, and promote the development of new medicines by providing an across the board support covering from basic researches to commercial production
Renewable energy production and other green industries (2.1 trillion won)
- Solar and wind power production: Invest 1.3 trillion won to help build generation facilities
- Hydrogen industry: Invest 0.6 trillion won in the production, distribution and use of the hydrogen energy
- Energy efficiency: Work on demand-side energy management through smart power meters and big data
- Green enterprises: Provide 75 tech firms with support for their solutions to the current environmental problems
Strengthen major manufacturing industries and services (5.5 trillion won)
- High tech manufacturing materials and parts: Expand support to 338 high tech supplies and promote R&D for those technologies
- Industrial complexes and free economic zones: Upgrade industrial complexes with smart and integrated systems for logistics and energy management, and increase free economic zones equipped with innovative clusters
- Smart SMEs: Support smart manufacturing in SMEs by building digital clusters, upgrading smart factories, providing loans and guarantees, and promoting R&Ds in manufacturing
- Promising services: Help develop online and noncontact services in culture and tourism, and healthcare
3) Strengthen social safety nets, as well as employment safety nets
Strengthen the four social safety nets (46.9 trillion won)
- Increase basic social security benefits and ease requirements for livelihood benefits, as well as expand emergency assistance
- Improve the national health insurance for low-income groups and expand senior healthcare insurance support
- Increase subsidized housing, particularly for young adults and the newly married, as well as introduce housing support for single households to those in their 20s
- Expand free education to high schools, and adopt online and remote learning for all education programs from daycare to high school
Protect vulnerable groups
- Disabled: Expand disability benefits, increase support for care services and create jobs appropriate for them
- Farmers and fishers: Expand farmers’ pension and introduce direct payments to fishers, as well as invest 130 billion won to increase loan guarantees
- Veterans: Increase veteran benefits for spouses and dependents, as well as disability compensation rates
- Multicultural families: Increase assistance, including interpretation services, to help settle in the country
- Inequalities in digital proficiency: Set up high speed networks in rural areas, expand public Wi-Fi and provide education to help bridge the digital divide
Build an employment safety net (20.0 trillion won)
- Expand the employment insurance system and industrial accident compensation insurance to low-income artists and independent workers
- Expand unemployment benefits, and improve public employment services and job training programs
Prepare for demographic changes: Work to increase birth rates and respond to ageing population
- Work on low birth rates: Increase childcare support, provide flexible part-time daycare options, expand after school programs, provide housing support for the newly married and young adults, and promote family-friendly work environment
- Ageing population: Expand retirement benefits to all basic pension recipients, create 800,000 senior jobs, increase support for senior care and invest in digital care services, and promote a silver economy, such as Alzheimer diagnostic kits and other high tech healthcare products
4) Improve safety and living quality: Invest in safe and clean environment, as well as national defense and foreign relations
Develop K-disease prevention (1.8 trillion won)
- Improve the country’s “prevention-diagnosis-treatment” system to prepare for the possibility that COVID19 will become a long-term battle
- Develop into an industry: Invest in vaccine and treatment development, grow professionals and build ICT-based medical care facilities
- Export K-disease prevention systems and products: Invest in global approval and strengthen global cooperation
Improve safety (5.4 trillion won)
- Protect people’s lives (2.7 trillion won): Reduce traffic accidents and industrial accidents (50 percent cut by 2022), and help improve mental health
- Prevent natural disasters (2.6 trillion won): Build and repair facilities, adopt smart river management systems and set up a dam monitoring system
- Human rights protection: Protect children and women from abuse, as well as child and female suspects from being abused during the investigation
Provide cleaner environment (3.0 trillion won)
- Make the air cleaner (1.3 trillion won): Encourage cement manufacturers and small factories to equip with fine dust reduction systems, promote the scrapping of old diesel vehicles, the use of diesel particulate filter (DPF) and the shift to LPG for trucks and school buses, promote the use of low- NOX boilers
- Invest in cleaner water (1.1 trillion won): Build an ICT-based drinking water management system, and repair dams and other river facilities to improve water quality
- Urban forests and others (0.6 trillion won): Increase urban forests, invest in waste management, and make cities smart and green
Strengthen national defense (52.9 trillion won)
- Make national defense smart and stronger: Build a defense system against nuclear weapons and WMD, invest in high technologies, and promote civil-military cooperation in R&Ds
- Improve war fighting capabilities: Equip with high tech weapons, build an AI-based surveillance system, and adopt AR and VR for training
- Boost morale: Give pay raises, provide better meals and clothing, provide a personal development entitlement and offer civilian health insurance
- Prepare for non-conventional threats: Enhance response capabilities for non-conventional threats, such as infectious diseases and terrorist attacks
Diplomacy and cooperation (1.68 trillion won)
- Work on bilateral and multilateral relations, as well as public diplomacy
- Use K-culture, share the country’s development experience and policies, and seek non-contact ways of cooperation
- Economic cooperation with North: Work on the railroad project and DMZ peace park project, and expand humanitarian cooperation projects
II. 2020-2024 National Fiscal Management Plan
1. Key Policies
-Fiscal resources management will be focused on innovation, inclusiveness and social safety: The government will continue to pursue innovation through the Korean New Deal to prepare for the post-corona world, as well as to transform the economy from a fast follower to a first mover, to accelerate job growth and to help the economy regain dynamism.
- The government will continue to pursue inclusiveness by securing jobs and better quality of living as it will make social safety nets stronger.
- The government will work to ensure fiscal sustainability through spending restructuring and inter-ministerial cooperation, as well as by increasing spending efficiency and innovating national contract and procurement systems.
- The government will work on broadening the tax base, increasing non-tax revenues, making good use of government properties and promoting private investment in public projects to better manage fiscal resources.
2. Mid-term Fiscal Outlook and Fiscal Management Goals
- Total government revenues are projected to increase at an average of 3.5 percent every year in 2020-2024.
- Total government expenditures will be managed to increase at an average of 5.7 percent every year in 2020-2024
Mid-term Outlook for Government Revenues and Expenditures
(trillion won, %)
|
|
2020
|
2021
|
2022
|
2023
|
2024
|
Annual growth (%)
|
|
original
|
supplementary
|
|
Total Government Revenues
- Tax Revenues
|
481.8
292.0
|
470.7
279.7
|
483.0
282.8
|
505.4
296.5
|
527.8
310.1
|
552.2
325.5
|
3.5
2.8
|
|
Total Government Expenditures
(growth, %)
|
512.3
(9.1)
|
546.9
(16.5)
|
555.8
(8.5)
|
589.1
(6.0)
|
615.7
(4.5)
|
640.3
(4.0)
|
5.7
|
- The consolidated fiscal balance minus social security funds will post a deficit to GDP in the mid-5 percent range in 2024.
- Government debt will be managed to be in the upper-50 percent range to GDP in 2024.
Mid-term Outlook for Fiscal Balance and Government Debt
(trillion won, %)
|
|
2020
|
2021
|
2022
|
2023
|
2024
|
|
original
|
supplementary
|
|
Consolidate Fiscal Balance minus Social Security
(% to GDP)
|
-71.5
(-3.5)
|
-111.5
(-5.8)
|
-109.7
(-5.4)
|
-123.2
(-5.9)
|
-128.2
(-5.9)
|
-127.5
(-5.6)
|
|
Government Debt
(% to GDP)
|
805.2
(39.8)
|
839.4
(43.5)
|
945.0
(46.7)
|
1,070.3
(50.9)
|
1,196.3
(54.6)
|
1,327.0
(58.3)
|
3. Restructure Fiscal Management
- Improve fiscal spending efficiency: Restructure fiscal projects by cutting overlapping projects and reinvesting in core projects, such as the Korean New Deal projects
- Improve the fiscal management system: Thoroughly evaluate fiscal projects according to investment priorities and take into consideration demographic, social and industrial changes in the future when making investment decisions
- Increase revenue: Strictly evaluate the effect of tax breaks, avoid tax evasion and promote private investment in public projects
- Revise the public procurement system in a way to promote industrial innovation and technology development
2020-2024 Budget Allocation Plans by area
(trillion won, %)
|
|
2020
|
2021
|
2022
|
2023
|
2024
|
Average growth (%)
|
|
Total Expenditures
(growth, %)
|
512.3
(9.1)
|
555.8
(8.5)
|
589.1
(6.0)
|
615.7
(4.5)
|
640.3
(4.0)
|
(5.7)
|
|
Health, Welfare, Employment
(growth, %)
|
180.5
(12.1)
|
199.9
(10.7)
|
217.4
(8.8)
|
230.2
(5.9)
|
242.7
(5.4)
|
(7.7)
|
|
Education
(growth, %)
|
72.6
(2.8)
|
71.0
(-2.2)
|
74.2
(4.4)
|
75.4
(1.6)
|
77.9
(3.4)
|
(1.8)
|
|
Culture, Sports, Tourism
(growth, %)
|
8.0
(10.6)
|
8.4
(5.1)
|
8.8
(4.7)
|
9.2
(4.0)
|
9.4
(3.0)
|
(4.2)
|
|
Environment
(growth, %)
|
9.0
(21.8)
|
10.5
(16.7)
|
11.4
(8.3)
|
12.1
(6.1)
|
12.6
(4.0)
|
(8.7)
|
|
R&D
(growth, %)
|
24.2
(18.0)
|
27.2
(12.3)
|
29.1
(6.9)
|
30.7
(5.4)
|
32.0
(4.3)
|
(7.2)
|
|
Industry, SME, Energy
(growth, %)
|
23.7
(26.4)
|
29.1
(22.9)
|
32.3
(10.9)
|
34.2
(5.8)
|
35.6
(4.0)
|
(10.7)
|
|
SOC
(growth, %)
|
23.2
(17.6)
|
26.0
(11.9)
|
27.8
(6.8)
|
28.7
(3.4)
|
29.3
(2.0)
|
(6.0)
|
|
Agriculture & Forestry, Fishery, Food
(growth, %)
|
21.5
(7.4)
|
22.4
(4.0)
|
23.0
(2.7)
|
23.3
(1.3)
|
23.5
(1.1)
|
(2.3)
|
|
National Defense
(growth, %)
|
50.2
(7.4)
|
52.9
(5.5)
|
56.1
(6.0)
|
58.6
(4.5)
|
60.9
(4.0)
|
(5.0)
|
|
Diplomacy, Reunification
(growth, %)
|
5.5
(8.8)
|
5.7
(4.3)
|
6.0
(4.0)
|
6.2
(4.0)
|
6.5
(3.9)
|
(4.1)
|
|
Social order, Safety
(growth, %)
|
20.8
(3.5)
|
21.8
(4.4)
|
22.8
(4.8)
|
23.7
(4.1)
|
24.6
(3.4)
|
(4.2)
|
|
Public administration, Local governments
(growth, %)
|
79.0
(3.2)
|
86.5
(9.5)
|
87.6
(1.3)
|
92.0
(5.0)
|
94.9
(3.2)
|
(4.7)
|
III. Future Plans
The 2021 budget proposal and the 2020-2024 National Fiscal Management Plan will be submitted to the National Assembly on September 3, after proceeding through the Cabinet Meeting on September 1.
Please refer to the attached pdf
