Analysis of the First Supplementary Budget Plan for 2021

Published on March 8, 2021
Published by Budget Analysis Coordination Division

   Two months since the execution of the 2021 main budget, the government submitted the First Supplementary Budget Plan for 2021 to the National Assembly on March 4th. In 2020, the government pursued programs to support social classes vulnerable to the COVID-19 pandemic as well as to stabilize employment via four rounds of supplementary budget allocations. Despite such measures, however, the ongoing pandemic and related infection prevention and control measures give rise to the need for additional measures to support the vulnerable classes categorized as “social blind spots,” create jobs and ensure free vaccinations for all Koreans.
   The recently submitted supplementary budget plan for pursuing additional measures to provide support for damages involves an increased budget of 15 trillion Korean won, consisting of three parts. 1) 8.1 trillion won is for emergency compensation for losses suffered by micro enterprises and groups with vulnerable employment status, 2) 2.8 trillion won is for emergency employment measures such as job creation, and 3) 4.1 trillion won is for disease prevention and control measures including the purchasing and injection of COVID-19 vaccines. While the supplementary budget is sourced from disposable funds in the surplus of special tax accounts (2.6 trillion won), the BOK settlement surplus (0.8 trillion won) and national surplus funds (1.7 trillion won), sovereign bonds amounting to 9.9 trillion won are also being issued, resulting in 965.9 trillion won in national debt which is nearly 48.2% of GDP. Also, the fiscal deficit is expected to increase by 13.5 trillion won compared to the main budget for 2021.
   NABO published the Report on the Analysis of the First Supplementary Budget Plan for 2021 in order to support the National Assembly’s thorough examination of the supplementary budget plan. This report is composed of two chapters. Chapter 1 features a comprehensive analysis of the plan’s allocation conditions, financing resources, fiscal soundness and economic conditions; whereas Chapter 2 provides an in-depth analysis of the urgency, necessity, possibility of execution within the current year as well as the effectiveness of individual programs allocated to each government ministry.