This report analyzes the ‘2011–2015 National Fiscal Management Plan’ that was submitted to the National Assembly by the Administration, and presents the economic and fiscal outlook independently conducted by the National Assembly Budget Office (NABO). In addition, this report presents the analysis of the ‘2011–2015 Government Debt Management Plan,’ ‘2011–2015 Government Guaranteed Debt Management Plan’ and ‘2011–2015 Medium to Long-term Fund Financial Management, Plan,’ all submitted as the appendices of National Fiscal Management Plan in accordance with National Finance Act.
NABO’s analysis indicated a deficit decrease in the operational budget balance from −16.1 trillion won in 2011 to −6.7 trillion won in 2015. With regards to the government debt to GDP ratio, it was forecasted to continuously decrease from 33.5 percent in 2011 to 31.7 percent in 2015. This report also stated that the government debt to GDP ratio should be maintained at the same level as that of this year for the purpose of not deteriorating fiscal soundness while somewhat alleviating the austerity in order to respond to the declining global economy in 2012. Namely, it emphasized need for a discussion in the National Assembly’s budget deliberation. It is recommended to improve the fiscal responsiveness to economic fluctuations while maintaining stable fiscal condition based on its view that 2012 will be a period of economic recession. The economy growth rate of 2012 is projected to fall short of the potential growth rate. It also identifies that fiscal soundness should be restored from medium-term perspective by once again tightening the budget after 2013, when the economic growth rate will start to exceed the potential growth rate.
A summary of the “Analysis of the 2011–2015 National Fiscal Management Plan” appendices is as follows:
First, the analysis of the ‘2011–2015 Government Debt Management Plan’ emphasized the need for the National Assembly to reinforce its control on the use of idle fund money for appropriating fiscal deficit.
Second, the analysis of the ‘2011–2015 Government Guaranteed Debt Management Plan’ points out the need to increase the estimation accuracy of government guaranteed debt and presents specific basis of the forecast, as well as the need to supplement the debt-specific management plan.
Lastly, the analysis of the ‘2011–2015 Medium to Long-term Fund Financial Management Plan’ emphasizes the need to complete the mandatory items such as the evaluation of previous year’s Fund Financial Management Plan, as well as to provide a long-term forecast of over 30 years instead of the current 5-year forecast of pension fund.
NABO’s analysis indicated a deficit decrease in the operational budget balance from −16.1 trillion won in 2011 to −6.7 trillion won in 2015. With regards to the government debt to GDP ratio, it was forecasted to continuously decrease from 33.5 percent in 2011 to 31.7 percent in 2015. This report also stated that the government debt to GDP ratio should be maintained at the same level as that of this year for the purpose of not deteriorating fiscal soundness while somewhat alleviating the austerity in order to respond to the declining global economy in 2012. Namely, it emphasized need for a discussion in the National Assembly’s budget deliberation. It is recommended to improve the fiscal responsiveness to economic fluctuations while maintaining stable fiscal condition based on its view that 2012 will be a period of economic recession. The economy growth rate of 2012 is projected to fall short of the potential growth rate. It also identifies that fiscal soundness should be restored from medium-term perspective by once again tightening the budget after 2013, when the economic growth rate will start to exceed the potential growth rate.
A summary of the “Analysis of the 2011–2015 National Fiscal Management Plan” appendices is as follows:
First, the analysis of the ‘2011–2015 Government Debt Management Plan’ emphasized the need for the National Assembly to reinforce its control on the use of idle fund money for appropriating fiscal deficit.
Second, the analysis of the ‘2011–2015 Government Guaranteed Debt Management Plan’ points out the need to increase the estimation accuracy of government guaranteed debt and presents specific basis of the forecast, as well as the need to supplement the debt-specific management plan.
Lastly, the analysis of the ‘2011–2015 Medium to Long-term Fund Financial Management Plan’ emphasizes the need to complete the mandatory items such as the evaluation of previous year’s Fund Financial Management Plan, as well as to provide a long-term forecast of over 30 years instead of the current 5-year forecast of pension fund.
Fiscal Policy Analysis Team