Lee Jae-myung's Criticism of the 'Joseyeon Report' Sparks Controversy... Is the Regional Currency Impact Analysis Political?

Governor Lee mentions investigation and disciplinary action
Korea Institute of Public Finance says "No political intent"

Gyeonggi Province Governor Lee Jae-myung (file photo) [Image source=Yonhap News]

[Sejong=Asia Economy Reporter Joo Sang-don] Lee Jae-myung, Governor of Gyeonggi Province and a leading presidential candidate, has intensified controversy by criticizing a national research institute's analysis of the effects of 'local currency' as a "nonsensical report and political claim." As Governor Lee went beyond criticizing the report's content to mention "investigation and disciplinary action," criticism has arisen that this amounts to "muzzling a national research institute."

On the afternoon of the 15th, Governor Lee posted on his Facebook titled "Five reasons why the Korea Institute of Public Finance's announcement belittling local currency is nonsensical," claiming that the institute's research results were flawed.

Earlier that day, the Korea Institute of Public Finance released a report titled "The Impact of Local Currency Introduction on the Regional Economy," analyzing that "while the introduction of local currency brings various economic effects, there also appear to be many adverse and substitution effects that hinder or offset these benefits." The report estimated that of the government subsidies amounting to 900 billion KRW for local currency, a net loss of 46 billion KRW does not transfer to consumer welfare. It also pointed out that printing costs and financial fees, amounting to 2% of the face value, incur additional expenses, resulting in annual incidental costs of 180 billion KRW this year, leading to a total economic net loss of 226 billion KRW for the year.

Governor Lee stated, "The Korea Institute of Public Finance, which researches and supports government policies funded by taxpayers' money, has released research results that are flawed in timing, content, and purpose," adding, "It outright denies the local currency policy, a core policy of the current administration." The government plans to support the issuance of local love and Onnuri gift certificates worth 18 trillion KRW next year with a budget of 1.3 trillion KRW.

Governor Lee pointed out that the Korea Institute of Public Finance's research covers local currency from 2010 to 2018, before the Moon Jae-in administration fully implemented it, making it disconnected from the current period of local currency implementation. He also found it strange that research results from two years ago were suddenly released at this time. Furthermore, he claimed that the findings contradict those of other national research institutes such as the Korea Institute of Public Administration. He raised his voice, saying, "It is absolutely necessary to conduct a strict investigation and disciplinary action regarding why the Korea Institute of Public Finance, which selects research topics in consultation with the Ministry of Economy and Finance, submitted research results that lack timeliness and completeness, contradict other government research institutes' findings and government policy directions, ignore the economic effects felt by the entire nation, and resemble political claims at this time."

In response, the Korea Institute of Public Finance stated that there is "no political intent." Song Kyung-ho, Deputy Research Fellow at the institute who authored the report, said, "The report is based on objective facts and analyzed from multiple angles, with no political intent whatsoever." He added, "Governor Lee criticized that the analysis only covered up to 2018, but we used the most recent statistics released in the first half of this year." He further mentioned, "We plan to extend the time series and conduct additional analysis in the future."

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