With an aim to support restructuring and create jobs, the Korean government formulated its first supplementary budget bill, worth KRW 11 trillion in total, and submitted it to the National Assembly on July 26, 2016. This report, Analysis of the First Supplementary Budget Bill for 2016, focuses its analysis on the following items:
First, specific programs in the government’s package are analyzed to determine if they are in line with the package goals to “support restructuring and create jobs,” and its requirement of “prompt creation and execution within the year to produce policy effects”.

This analysis is intended to contribute to promoting fiscal soundness as well as efficiency in fiscal management through a winnowing out of those programs low on the priority list, poor feasibility in terms of implementation within the year, or forecast to have negligible economic impact.
Second, analysis is also done on the effect of revised revenue based on the projection of national tax revenue in the second half of the year, as well as the macro-economic impact of the revised budget and subsequent changes in fiscal soundness.

The Korean government proposes to use its projected 2016 tax surplus of KRW 9.8 trillion for the extra budget, but NABO forecasts the surplus will reach KRW 12.5 trillion in the second half of the year, which exceeds the government’s estimates by KRW 2.7 trillion. Moreover, analysis shows that the timeliness of budget execution will be quite significant in creating jobs and boosting the economy as the government expects. Meanwhile, while using the projected tax surplus for the supplementary budget avoids increasing the national debt within the year, it also incurs opportunity costs as the surplus cannot be used to pay down the national debt next year.

Third, fiscal programs are analyzed by major policy goal of the revised budget to present its highlights and topics for discussion during the National Assembly’s review.

On top of assessing issues as NABO has usually done, this analysis summarizes fiscal programs based on core policy goals of the supplementary budget, including support for restructuring, job creation and stability in people’s lives, revitalizing local economies, and improving local finances. The analysis summarizes the highlights and discussion topics to effectively support the National Assembly in reviewing the revised budget proposal.