(Sejong = Yonhap News) Reporters Lee Se-won, Lee Dae-hee, and Song Jeong-eun = The plan to allow up to 30% of the main expenditure amount of the Future Response Fund to be changed on its own is also expected to be controversial during the legislative process.
The government judged it necessary to quickly respond to changes in tax revenue and the economy, but some say that the Future Fund has a different nature from financial funds, which usually apply a 30% limit, and that the project cost is large, so more checks from the National Assembly are needed.
According to the fiscal authorities and political circles on the 4th, the National Assembly's Finance and Economic Planning Committee evaluated the Future Fund in its recently released review report on the National Finance Act amendment, saying, "There is a difference in the expenditure structure of the Financial Ministry in that most of the expenditure is for business purposes with pre-determined policy goals and support targets."
The purpose is that in-depth discussions are needed taking into account the financial control function of the National Assembly.
In the National Finance Act amendment proposed last month, the government set the limit on change in expenditures for major items of the Future Fund, which can be changed without resolution of the National Assembly, at 30%, similar to the Financial Fund. The 20% limit applies to โbusiness fundsโ rather than financial funds.
There are eight types of 'financial funds' to which the 30% self-change limit is applied under the current National Finance Act, including the Technology Guarantee Fund, the Agriculture, Forestry and Fisheries Credit Guarantee Fund, the Farm and Fish Savings Incentive Fund, the Trade Insurance Fund, the Industrial Infrastructure Credit Guarantee Fund, the Credit Guarantee Fund, and the Deposit Insurance Fund Bond Redemption Fund.
The report explained that financial funds are "funds that are directly linked to financial transactions such as guarantees, insurance, bond repayment, and savings promotion, and have large fluctuations in the amount of expenditure depending on financial market conditions or demand for funds."
At the same time, he expressed his opinion that "there is a need to consider the nature of the future response fund" when deciding whether to allow a self-change limit of 30%.
According to the fund management plan submitted by the government to the National Assembly last month, the 2027 project cost of the Future Response Fund is 45.3625 trillion won.
Among 72 funds, it ranked second after the National Pension Fund (KRW 59.8094 trillion). Next year's project cost per fund is approximately 3.9682 trillion won, which is 11.4 times the average.
The total limit that can be changed based on 30% is approximately 13.6 trillion won. It is about 4.5 trillion won more than when the standard was set at 20% (about 9.1 trillion won).
The Finance and Economy Committee noted that the Future Fund is large in size and that the project costs for each program were set on a large scale. This means that the amount that can be changed at discretion can also increase.
The 30% self-change is made on a program basis, equivalent to a 'section' in budget practice, but since the future fund's expenditures for each program are initially large, the report observed that "the amount that can be changed without prior approval from the National Assembly can reach a significant amount."
The Future Fund's four business accounts, including youth, growth engines, local regions, and education/talent, include two surplus fund management programs and six programs in total, including comprehensive support for youth, expansion of growth engines, local-led growth, and education/talent support.
Excluding surplus fund management, approximately 45.4 trillion won of the budget allocated to the business account will be invested into four programs. The smallest program among the four is education and talent support (approximately 7.6 trillion won), which is larger than the total budget for next year of most other funds.
By simple calculation by applying a limit of 30%, the report analyzed that comprehensive support for youth can be changed to about 3.99 trillion won, expansion of growth engines can be changed to about 4.26 trillion won, local-led growth can be changed to about 3.09 trillion won, and education and talent support can be changed to about 2.28 trillion won.
The Finance and Economy Committee said in its report, "There is a need to discuss whether limiting the obligation to report to the National Assembly without delay only to 'changes using excess tax revenue' while applying the 30% self-change special exception is a sufficient control device," and suggested in the report that if the change limit of 30% is recognized, a plan to immediately submit change details to the National Assembly when it exceeds 20% or a certain amount could also be considered.
The Future Fund's special case for carrying over local account assistance projects (transferring accounts from one accounting period to the next period) is also expected to cause controversy.
The Finance and Economy Committee interpreted that as the amendment includes a provision to carry over the amount that was not spent within the relevant fiscal year due to unavoidable reasons during auxiliary projects to the next fiscal year, there is a possibility that it can be carried forward for up to four fiscal years.
In the enactment of the Act on the Establishment and Management of the Future Response Fund, there is a "separate special case" that allows local governments to carry over to the next fiscal year after receiving local account auxiliary project expenses, so the carryover provisions can be applied repeatedly.
The report cites as an example the case where a local development assistance project allocated to the local account of the Future Response Fund in 2027 was carried forward to 2029 due to delays in the business plan at the central fund management entity level and then handed over to local governments, and was then carried forward again to 2031 due to delays in licensing, design, and construction, extending the execution period to 5 years.
In relation to this, the Ministry of Planning and Budget explained, "Considering the need for flexible execution to respond to the future, we have set the fund's own change requirement at 30% and plan to promote it by explicitly establishing a legal basis through deliberation and resolution by the National Assembly."
In the case of the special carry-over provision stipulated in the Future Response Fund Act, the Ministry of Planning added, โIt is intended to match the carry-over period of the central government and local governments to the carry-over period (up to 3 years for the project period),โ and โeven in the process of executing the actual project, we plan to operate it by allowing only the carry-over period.โ
