Settings

ⓕ font-size

  • -2
  • -1
  • 0
  • +1
  • +2

ContributionClimate Response Fund's effectiveness will be determined by 'how well it is spent'

  • Facebook share button
  • Twitter share button
  • Kakao share button
  • Mail share button
  • Link share button
Jón Blöndal, head of the Public Management and Budgeting Division, OECD / Courtesy of Ministry of Economy and Finance
Jón Blöndal, head of the Public Management and Budgeting Division, OECD / Courtesy of Ministry of Economy and Finance
By Jón Blöndal

As the COVID-19 pandemic has unfolded with its severe economic and social implications, OECD governments have responded with unprecedented fiscal resources to support businesses and families in order to mitigate its effects. Korea has been especially resourceful in its use of budget measures in this regard.

In fiscal terms, Korea came into the COVID-19 crisis in an enviable condition compared to many other OECD countries. Korea has a long-established and admired record of fiscal responsibility and enjoys one of the lowest debt-to-GDP levels in the OECD. Korea has also invested in the modernization of the institutions, processes and tools it uses to allocate and manage the budget.

As a result, Korea was able to deploy very large resources due to its low debt ratio, and to allocate them effectively at very short notice to the areas where they were most needed, due to its modern system of budgeting.

As the COVID-19 pandemic abates, governments across the OECD are now transitioning from "crisis mode" which characterized the first responses, to a new phase of supporting the economic recovery by investing in the future ― focusing spending on areas that will enhance long-term economic growth and social and environmental objectives.

A particular focus in OECD countries is to channel recovery funds into investments in new infrastructure, new energy and new technologies to meet the monumental challenges facing all our countries from climate change and other environmental issues. Korea has been a leader in advancing this agenda, most recently with the creation of the Climate Response Fund.

It is important that such "green" investments be subject to the same scrutiny as other expenditures to ensure their effectiveness and efficiency. It is not only how much money is spent, but also how well it is spent that matters.

Another emphasis we see in OECD countries is the further development of gender budgeting, i.e. tools that analyze the impact of budget measures by gender. Gender equality is not only a basic human right, but it also offers the possibility to have a major impact on long-term economic growth. Measures that support greater labor market participation by women can be especially pronounced in countries such as Korea, with unfavorable demographic and labor market trends due to aging populations.

It is important to bear in mind that OECD countries were facing many long-term fiscal challenges prior to the COVID-19 crisis, and they are being forward-looking and preparing the ground for eventual fiscal consolidation efforts once the recovery is secured. Fiscal sustainability is as important as ever. The development of systematic spending reviews, where all government expenditure is scrutinized, including the baseline of existing expenditures, is advancing in parallel to the new recovery spending. This situation will allow countries to have fully formed initiatives in place for future fiscal consolidation efforts.

Korea was able to respond to the COVID-19 crisis so robustly because of its low levels of debt and its modern budgeting system. It is important for Korea to continue to prioritize fiscal prudence and good budgeting practices in order to be in the same favorable position to respond to future crises that may arise.

The writer is head of the public management and budgeting division at the OECD.



Lee Kyung-min lkm@koreatimes.co.kr


X
CLOSE

Top 10 Stories

go top LETTER