President Moon: "Government Must Fully Mobilize Fiscal Capacity with Determination to Prepare 'Wartime Budget'"

President Moon Jae-in is speaking at the 2020 National Fiscal Strategy Meeting held at the Blue House on the 25th. [Image source=Yonhap News]

[Asia Economy Reporter Son Sun-hee] President Moon Jae-in said on the 25th, "We must mobilize the government's fiscal capacity to the fullest with the determination to prepare wartime finances."

In his opening remarks at the '2020 National Fiscal Strategy Meeting' held at the Blue House State Guest House at 2 p.m. that day, President Moon emphasized the need for 'expansionary fiscal policy,' saying, "When putting out a fire, pouring enough water early on can lead to quicker extinguishing and prevent greater damage." He added, "(Fiscal policy) must take the lead in alleviating the suffering of the people during the economic crisis," emphasizing, "Now is a more urgent time to ask, 'For whom is the fiscal policy, and what is it aimed at?'"

President Moon stated, "The fiscal authorities have focused on soundness and reserved room for expansionary fiscal policy, which has become a great strength," and revealed, "Through five emergency economic meetings, we have made a drastic decision to inject a total of 250 trillion won into small and medium-sized enterprises, vulnerable employment groups, affected industries, and key industries." This amount corresponds to 13% of South Korea's Gross Domestic Product (GDP).

However, President Moon said, "As the contraction of the real economy, including employment and exports, is becoming full-fledged, a more bold fiscal role is needed," and urged, "Please swiftly prepare the third supplementary budget bill that goes beyond the first and second supplementary budgets." He added, "It should include bold support to expand employment safety nets and social safety nets, protect crisis-hit companies and people's jobs, and revive economic vitality." Especially addressing members of the National Assembly, he requested, "Since the effectiveness of the supplementary budget depends on speed and timing, please cooperate so that the third supplementary budget can be processed within June in the new National Assembly."

Regarding criticisms that excessive expansionary fiscal policy worsens fiscal soundness, President Moon said, "In this serious crisis, we must promote a longer-term virtuous cycle of fiscal investment by quickly overcoming the crisis through sufficient fiscal input and increasing economic growth to restore fiscal soundness," emphasizing, "In the long run, this is the way to prevent the deterioration of the national debt ratio relative to GDP."

He added, "Our national finances are very sound even among OECD countries," explaining, "Our national debt ratio, including the second supplementary budget, is at the 41% level, and even with the third supplementary budget, it remains significantly lower than the OECD average of 110%."

While emphasizing 'expansionary fiscal policy,' President Moon also called for rigorous expenditure restructuring, saying, "Unnecessary and non-urgent expenditures must be boldly reduced." He stated, "Considering that next year's revenue conditions will not be easy, painful expenditure restructuring is essential," and pledged, "The government will tighten its belt first."

This content was produced with the assistance of AI translation services.