Government officials warned that Korea will face a catastrophic effect equivalent to the U.S. government shutdown in October if the National Assembly does not pass the 2014 budget bill by year-end.
Lawmakers failed to pass the budget by the legal deadline on Monday due to political strife between the ruling and opposition parties over key national and economic issues, including tax revision and the appointment of an audit chief.
Korean lawmakers have not passed the annual budget for 11 straight years. Political analysts had expected the same result this year as the main opposition Democratic Party walked out of the National Assembly last Friday after ruling Saenuri Party lawmakers unilaterally approved the appointment of its audit chief.
Experts said failure to pass the budget would lead to job losses and the suspension of key infrastructure projects next year as the incumbent President Park Geun-hye administration would have to manage state affairs with the provisional budget set in 2013.
Deputy Prime Minister and Finance Minister Hyun Oh-seok urged lawmakers to return to the negotiating table and swiftly pass the budget. Otherwise, the Korean economy would be pulled into a “black hole of economic uncertainty,” the finance minister told the press on Sunday.
He said that a budget hiatus would adversely affect the government’s creation of some 650,000 jobs next year, and infrastructure projects worth some 20 trillion won ($19 billion) would grind to a halt.
Infrastructure suspension would further aggravate job losses, government officials said.
“It’s fine that (the DP) disapproves of the budget. We just wish they would come back inside the National Assembly and restart talks,” Deputy Prime Minister Hyun said.
Besides the political gridlock over the appointment of Korea’s audit chief, opposition lawmakers demanded the withdrawal of the administration’s tax revision, including tax cuts for the rich.
They also called on the ruling party and the government to follow through with their welfare pledges for the middle- and low-income classes, disapproving their plans to cut down the scale of the administration’s welfare policy including basic pensions for senior citizens.
The Park administration planned to invest more than 100 trillion won in welfare projects next year, by far the biggest investment in the sector by a single Korean government.
Government agencies requested a combined budget of 364.7 trillion won for next year, up about 23 trillion won or 6.6 percent from 2013.
By Park Hyong-ki (firstname.lastname@example.org