Supplementary Budget
Overview
A supplementary budget (추경, 追加經, Supplementary Budget) refers to a budget that the government additionally compiles and executes after the main budget for the current fiscal year has been approved, in response to unforeseen fiscal needs or changes in economic conditions. It is an important tool for fiscal management, ensuring budget flexibility and enabling timely policy responses.
Main Content
Concept and Legal Basis
Supplementary budgets are grounded in the National Finance Act and the Local Finance Act. Like the main budget, they are finalized through deliberation and approval by the National Assembly (or local councils). In principle, they are compiled within the total budget amount, but with special reasons and approval from the National Assembly, they may exceed the total amount.
Reasons for Compiling a Supplementary Budget
Major reasons for compilation are as follows:
1. Unpredictable Expenditure Increases: Recovery from natural disasters (typhoons, floods, etc.), urgent national security-related expenditures, response to large-scale accidents, etc.
2. Response to Economic Fluctuations: Economic stimulus through expanded fiscal spending during recessions, job creation projects to overcome downturns, etc.
3. Revenue Shortfalls or Surpluses: Covering fiscal deficits due to tax revenue shortfalls, or allocating unexpectedly large tax revenue surpluses.
4. Urgent Implementation of New Policy Projects: Addressing rapid changes in government policy direction or newly emerging national challenges.
Procedure for Compiling and Executing a Supplementary Budget
1. Compilation: The government (Ministry of Economy and Finance) compiles a supplementary budget bill, which undergoes deliberation by the State Council.
2. Submission and Deliberation: The government submits the compiled supplementary budget bill to the National Assembly, where it is reviewed by standing committees and the Special Committee on Budget and Accounts, and then approved at a plenary session.
3. Execution: After the National Assembly's approval, the finalized supplementary budget is executed by each ministry.
4. Settlement: At the end of the fiscal year, it is settled together with the main budget and receives approval from the National Assembly.
Effects and Controversies of Supplementary Budgets
Supplementary budgets have the advantage of enabling rapid fiscal responses, but there is criticism that excessively frequent or politically motivated compilations can undermine fiscal soundness and increase the burden on the public. In particular, their use for populist expenditure expansion before elections or for specific groups often becomes a subject of controversy.
Recent Trends (as of 2024-2025)
In recent years, the South Korean government has compiled supplementary budgets mainly for reasons such as responding to the COVID-19 pandemic, accelerating investments in digital transformation and green growth, and strengthening support for the people's livelihood due to high prices and high interest rates. Especially in the second half of 2024, discussions on supplementary budgets were active, focusing on support for small business owners and the self-employed, responses to low birth rates, and investments to strengthen the AI and semiconductor ecosystem. Balancing the maintenance of fiscal soundness with effective economic stimulus has emerged as a key policy consideration.
Related Topics
- [[Main Budget]]
- [[National Finance Act]]
- [[Fiscal Policy]]
- [[Government Bonds]]
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