"Stop National Debt Growing Like a Snowball"... Increasing Need for Fiscal Soundness Act

Assemblyman Choo Kyung-ho Proposes Fiscal Soundness Act... Maintaining Debt Ratio Below 45% of GDP

[Asia Economy Reporter Jang Sehee] The government has prepared an unprecedented supplementary budget (supplementary budget) of 35.3 trillion won to overcome the economic crisis caused by the novel coronavirus infection (COVID-19). As the government injects large-scale finances, concerns about the deterioration of fiscal soundness are emerging.

According to the Ministry of Economy and Finance on the 7th, this third supplementary budget is the largest ever at 35.3 trillion won. Reflecting the scale of the 3rd supplementary budget (35.3 trillion won), South Korea's national debt stands at 840.2 trillion won, reaching 43.5% of the Gross Domestic Product (GDP). Compared to last year, it has increased by 99.4 trillion won in one year.

As the government maintains an expansionary fiscal stance, the speed of the government's national debt is accelerating further. It rose from 35.9% in 2018 to 37.1% last year, reached 39.8% with this year's main budget formulation, and soared to 43.5% after the 1st to 3rd supplementary budgets due to COVID-19.

The government holds the position that a certain level of national debt must be tolerated to respond to the unprecedented COVID-19 crisis. Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, said at a briefing held at the Government Complex Sejong on the 29th of last month, "If growth can be driven in the short term and sound finances can be secured, the rise in the national debt ratio due to the 3rd supplementary budget must be fully tolerated."

However, the National Assembly and academia point out that clear guidelines on the country's fiscal management policy should be specified in law. Song Eon-seok, a member of the Future United Party, said, "There must be a plan on how to manage national finances under what principles in the long term," adding, "There should be a guideline that sets an exact percentage and allows for prompt recovery if it is exceeded."

Meanwhile, Choo Kyung-ho, a member of the Future United Party, plans to propose an amendment to the National Finance Act to maintain the national debt ratio below 45% of GDP.

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