| From left are Ruling Democratic Party of Korea presidential candidate Lee Jae-myung, Yoon Suk-yeol, the presidential candidate of the main opposition People Power Party, and Finance Minister Hong Nam-ki. Yonhap |
Implementation of supplementary budget worth W30 trillion feasible: ruling party presidential candidate
By Lee Min-hyung
Korea's national debt is feared to snowball this year again, as the government is under mounting pressure to execute another supplementary budget for the self-employed stricken by the ongoing pandemic.
Both ruling and opposition parties are stepping up their rhetoric, urging the Ministry of Economy and Finance to draw up the extra budget before the Lunar New Year holiday which falls at the end of January.
Economists here advised the government to take a balanced approach when providing financial aid to self-employed workers, rather than offering unconditional support packages.
"Given the steeply rising national debt, it is not proper for the government to execute an excessive level of the supplementary budget," Sejong University economist Kim Dae-jong said. "Against this backdrop, the government is urged to share the financial burden with those who receive the benefit."
As small business owners have been hit hardest by the pandemic for the past two years, and the virus spread is showing no signs of abating, few would disagree with the idea of providing financial support to them, according to him.
"But the point should be on the selective support, and the government should not provide another round of disaster relief funds to all the citizens here," he said.
In November, the International Monetary Fund (IMF) also said that Korea should be alert to the escalating national debt. According to data from the organization, the country's GDP-to-national debt ratio is estimated to soar to 66.7 percent in 2026, from 47.9 percent as of the end of 2020. The pace of the increase is the fastest among 35 developed countries across the globe, according to the IMF.
Ruling Democratic Party of Korea presidential candidate Lee Jae-myung, however, argued Tuesday that the government should form a supplementary budget worth around 25 to 30 trillion won before the upcoming Lunar New Year holiday.
"What the self-employed and small business owners want is consumption coupons provided to the public in the name of disaster relief funds," Lee said. "The government offered cash or other direct forms of financial benefits to them, but those were not as effective as expected."
Yoon Suk-yeol, the presidential contender of the main opposition People Power Party, also pledged to draw up a supplementary budget worth 50 trillion won if he wins the election.
However, the economist advised the finance ministry to remain extra careful before confirming the exact amount of the budget, as the demands from both parties have come amid a wave of populist proposals about two months before the presidential election that falls in early March.
"It has been less than a week since the beginning of the new year, so it appears premature for the government to execute the extra budget for the time being," Kim said.
The finance ministry has changed its position on the execution of the extra budget amid repeated political pressure.
Finance Minister Hong Nam-ki said that it has yet to conclude whether to push ahead with the extra budget spending as of now. The authority remained firm in its willingness not to do so, but recently left open the possibility.
"The government will take comprehensively into account aspects such as how seriously the self-employed are being hit by the prolonged pandemic, before making a decision," he told reporters, Monday.