The National Assembly Budget Office published an analysis report for the first revised budget plan of 2013 submitted by the government to the National Assembly on April 18, 2013. The report is intended to support members of the National Assembly in reviewing the revised budget proposal.
This report reviews the need for a revised supplementary budget, analyzes its economic effects, the appropriateness of the revised revenue, and fiscal soundness, and offers an assessment of the feasibility of the programs of 23 ministries.
In this report, the National Assembly Budget Office believes that the revised budget will help bolster the economy at a time when active fiscal involvement is needed but that the proposed issuance of 15.8 trillion won in national debt will reduce fiscal soundness, rendering difficult not only the mid- to long-term maintenance of soundness in national finances but also balancing the budget for 2014. Regarding the 12 trillion won in revised revenue, the report raises issues with the discrepancy in timing for forecasting national tax revenue loss and overestimation of revenue. It points to the need to expand the tax base and restructure annual expenditures in order to restore fiscal soundness, which will otherwise deteriorate under the revised budget plan.
The specific programs in the five major categories were reviewed to determine whether they can be implemented before the end of the year, and if their expected effects are in line with their stated objectives. In the job creation category, some programs were found to be inappropriate to include in the revised budget plan for such reasons as lack of preparation. In the livelihood stabilization category, we raised the need to revisit the methodology and amount of assistance based on the actual program record and performance.
In the category of SME and export business assistance, we raised issue with the size of guarantee funds and suggested the need for more rigorous management of R&D funds. In the financial economy revitalization category, budgets should be adjusted to prioritize projects that are scheduled to be completed or other maintenance and repair projects to boost the economy. Finally, in the category of national financial support for regions, the government decided not to reduce local share taxes and school grants (by 2 trillion won) and compensate for the loss in local tax receipts (1.3 trillion won) following the reduction or exemption of acquisition tax. However, these measures are not expected to be highly effective in expanding regional finances.
Budget Analysis Office
This report reviews the need for a revised supplementary budget, analyzes its economic effects, the appropriateness of the revised revenue, and fiscal soundness, and offers an assessment of the feasibility of the programs of 23 ministries.
In this report, the National Assembly Budget Office believes that the revised budget will help bolster the economy at a time when active fiscal involvement is needed but that the proposed issuance of 15.8 trillion won in national debt will reduce fiscal soundness, rendering difficult not only the mid- to long-term maintenance of soundness in national finances but also balancing the budget for 2014. Regarding the 12 trillion won in revised revenue, the report raises issues with the discrepancy in timing for forecasting national tax revenue loss and overestimation of revenue. It points to the need to expand the tax base and restructure annual expenditures in order to restore fiscal soundness, which will otherwise deteriorate under the revised budget plan.
The specific programs in the five major categories were reviewed to determine whether they can be implemented before the end of the year, and if their expected effects are in line with their stated objectives. In the job creation category, some programs were found to be inappropriate to include in the revised budget plan for such reasons as lack of preparation. In the livelihood stabilization category, we raised the need to revisit the methodology and amount of assistance based on the actual program record and performance.
In the category of SME and export business assistance, we raised issue with the size of guarantee funds and suggested the need for more rigorous management of R&D funds. In the financial economy revitalization category, budgets should be adjusted to prioritize projects that are scheduled to be completed or other maintenance and repair projects to boost the economy. Finally, in the category of national financial support for regions, the government decided not to reduce local share taxes and school grants (by 2 trillion won) and compensate for the loss in local tax receipts (1.3 trillion won) following the reduction or exemption of acquisition tax. However, these measures are not expected to be highly effective in expanding regional finances.
Budget Analysis Office