Supplementary Budget
Overview
A Supplementary Budget (추가경정예산, Supplementary Budget) refers to a budget that the government formulates and obtains approval from the National Assembly to reflect unavoidable changes in circumstances or additional fiscal needs that arise after the main budget has been finalized by the National Assembly. It is generally utilized in unforeseen situations such as responding to economic downturns, recovering from natural disasters, national security crises, or large-scale unemployment. Since a supplementary budget modifies part of the main budget, it must undergo deliberation by the National Assembly and be carefully formulated considering fiscal soundness and efficiency.
Main Content
Necessity of a Supplementary Budget
A supplementary budget is necessary to quickly respond to fiscal needs that were not anticipated during the formulation of the main budget. For example, during the COVID-19 pandemic in 2020, the South Korean government formulated multiple supplementary budgets to support affected businesses, provide emergency disaster relief funds, and secure vaccines. Supplementary budgets are also formulated for rapid recovery and damage support in the event of natural disasters (typhoons, floods, earthquakes).
Formulation Procedure
The procedure for formulating a supplementary budget is as follows:
1. Demand Survey: The Ministry of Economy and Finance receives additional fiscal needs from each ministry.
2. Deliberation and Coordination: The Ministry of Economy and Finance, in consultation with fiscal authorities, establishes priorities and funding plans.
3. Cabinet Council Resolution: The government finalizes the supplementary budget proposal.
4. Submission to the National Assembly: The government submits the supplementary budget proposal to the National Assembly.
5. National Assembly Deliberation and Approval: The proposal undergoes deliberation by the Special Committee on Budget and Accounts and is approved at a plenary session.
Funding Methods
The funding for a supplementary budget is primarily secured through the following methods:
- Surplus from Previous Year: Surplus remaining after executing the previous year's budget.
- Excess Tax Revenue: Taxes collected more than expected.
- Issuance of Government Bonds: Raising funds by issuing additional government bonds (expanding fiscal deficit).
- Surplus Funds from Funds: Utilizing surplus funds from various funds.
Case Analysis
- 1998 Asian Financial Crisis: The South Korean government formulated a large-scale supplementary budget for financial restructuring and unemployment measures.
- 2008 Global Financial Crisis: A supplementary budget was formulated for economic stimulus, used for SOC investment and job creation.
- 2020–2021 COVID-19: A total of four supplementary budgets amounting to approximately 60 trillion won were formulated and allocated for disaster relief funds, small business support, and quarantine efforts.
- 2022: A supplementary budget of approximately 62 trillion won was formulated for price stabilization and livelihood support.
Advantages and Disadvantages
Advantages:
- Enables rapid fiscal response.
- Provides economic stimulus during downturns.
- Responds to unpredictable disasters and crises.
Disadvantages:
- Deteriorates fiscal soundness (increase in national debt).
- Potential for budget waste due to hasty formulation.
- Risk of being exploited for political purposes.
- Inadequate deliberation due to shortened review period in the National Assembly.
Recent Trends
From 2024 to 2025, the South Korean government has taken a cautious stance on formulating supplementary budgets. In 2024, emphasizing fiscal soundness amid high interest rates and high inflation, the government pursued fiscal adjustments within the main budget without a supplementary budget. However, in 2025, as concerns over economic slowdown and the need for livelihood stabilization grew, discussions on formulating a small-scale supplementary budget resumed. Notably, in March 2025, a supplementary budget proposal worth 5 trillion won for supporting small business owners and expanding energy vouchers for vulnerable groups was submitted to the National Assembly and is under deliberation. Additionally, the need for preemptive fiscal responses is being raised in preparation for global economic uncertainties (U.S. interest rate policy, China's economic slowdown). Investments related to digital transformation and the Green New Deal may also be expanded through supplementary budgets.
Related Topics
- [[Main Budget]]
- [[Fiscal Policy]]
- [[National Debt]]
- [[Ministry of Economy and Finance]]
- [[Special Committee on Budget and Accounts]]
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