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Video Description

Type: KIHASA Policy Featurette

Topic: What is the National Fiscal Management Plan?

Guest Speaker: Kim, Tae-il, Professor, Korea University

Transcript

Although our national budget is a one-year fiscal plan, it should be prepared with a longer-term perspective. That’s why, when the government submits its annual budget to the National Assembly on September 1, it is required by law to submit along with it a simplified five-year budget, called the National Fiscal Management Plan. The rationale for the required submission of the five-year fiscal management plan is that even a budget covering one short year should, in some measure, be built on a medium-term outlook.

The average annual budget increase in the current administration’s five-year plan last year was unmistakably a substantial cut from the Moon Jae-in administration’s. I think this is natural for the conservative government, but the problem is that the annual rate of budget increase is even lower in this year’s fiscal management plan. What accounts for such a difference from last year to this year in the same government’s five-year expenditure plan? The answer is in the tax revenues falling far short of projections, resulting in a significant reduction in the budget outlined in the latest National Fiscal Management Plan.