Analysis of the Second Installment of the Supplementary Budget Bill for 2021

Published on July 13, 2021
Published by Budget Analysis Coordination Division

   The government sent its “Second Installment of the Supplementary Budget Bill for 2021” to the National Assembly on July 2. The Bank of Korea forecasts the economic growth rate to jump from -1.0% in 2020 to 4.0% in 2021 and in the domestic economy, exports and facility investments are demonstrating bearish growth thanks to the global economic recovery. However, private consumption, which accounts for a large proportion of the domestic economy, consumption in the contact service industry, as well as the employment situation of the youth and middle-aged have not yet recovered to the pre-COVID-19 level.
   In addition, the emergence of the Delta subvariant might negatively affect recoveringprivate consumption, further exacerbating the damage to small business owners. Under these circumstances, this supplementary budget bill was submitted with an intention to support those affected, topromote recovery of the economy for people's livelihoods, and to implement quarantine measures in preparation for the subvariants of COVID-19, etc.
   The increase in the expenditure of this supplementary budget is 33 trillion won, and it consists of a total of four areas: ① 13.4 trillion won in support for COVID-19 damage to small business owners and low-income groups, ② 4.4 trillion won in strengthening quarantine measures including vaccine development, purchase, vaccination, and loss compensation, etc., ③ 2.6 trillion won in early recovery of employment and support for youth, cultural industries, and vulnerable population groups, ④ 12.6 trillion each has been allocated to support local businesses and farmers/fishermen, and to strengthen local finances.
   The supplementary budget will be sourced from 31.5 trillion won in additional tax revenue, 1.7 trillion won in net budget surplus in 2020, and 1.8 trillion won in the utilization of the fund resources. Of this, 2 trillion won will be used to repay government debt, which is expected to stand at 963.9 trillion won, down 2 trillion won from the first installment of the supplementary budget, reaching 47.2% of GDP.
   The National Assembly Budget Office has published its “Analysis of the Second Installment of the Supplementary Budget Bill for 2021” to support the National Assembly's in-depth review of the supplementary budget. The report consists of two chapters: In Chapter 1, the requirements, financial resources, financial soundness, and economic conditions of the supplementary budget were analyzed comprehensively, while in Chapter 2, the urgency, necessity, and effectiveness of the programs, and the feasibility of executing the program budget by the end of the year for individual programs organized by each ministry, etc. were analyzed in depth.