Supplementary budgeting during the COVID-19 pandemic in South Korea

Abstract

ABSTRACT This study explores the South Korean government’s fiscal response to the COVID-19 pandemic in relation to supplementary budgeting. In particular, we empirically examine the formulation of supplementary budgets and discuss its policy implications. We focus on South Korea, which effectively mitigated pandemic concerns in the early stage through expansionary fiscal policies. Our findings indicate that, first, budgetary projects that undergo the supplementary budgeting process in previous years tend to be organized again as the supplementary budget in response to the COVID-19 crisis. Second, information regarding the unused budget in the past, which is a widely adopted indicator of budget inefficiency, does not influence the supplementary budgeting process to improve budget efficiency. These results suggest that, in the face of time and information constraints, budgetary agencies obtain relevant information from past experiences to formulate the supplementary budget during the COVID-19 pandemic; however, the positive effects are limited because agencies do not adequately utilize efficiency-related information.