The Shackles of Expanded Redefinition 'Fiscal Rules' Delayed Again Due to Ruling Party Opposition

Announcement Likely on October 5-6 Right After Chuseok Holiday... "Final Coordination Stage"

Deputy Prime Minister for Economy Hong Nam-ki and Kim Tae-nyeon, floor leader of the Democratic Party of Korea, are attending the 2021 budget formulation party-government consultation held at the National Assembly on the 26th, talking during the meeting. Photo by Yoon Dong-joo doso7@

[Asia Economy Reporter Jang Sehee] The Ministry of Economy and Finance has postponed the announcement of the fiscal rules that were planned to be released within this month. Fiscal rules are norms set to ensure that fiscal indicators such as national debt do not exceed certain levels.

According to the Ministry on the 30th, the government plans to announce the fiscal rules around the 5th to 6th, right after the Chuseok holiday. A government official stated, "There are still parts that need to be refined," and added, "We are in the final coordination stage."

The government had originally announced that the announcement would be made by the end of September. Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, said at the National Assembly's Planning and Finance Committee on the 21st, "We intended to submit the fiscal rules by the end of August, but we are reviewing overseas cases and plan to announce them by the end of September." Kim Yong-beom, First Vice Minister of the Ministry of Economy and Finance, also said at a briefing after the Emergency Economic Central Countermeasures Headquarters meeting on the 28th, "The procedure for consultation with the ruling party is in the final stage. We are doing the final work to announce it within September."

It is interpreted that the announcement was delayed because coordination with the ruling party was not smooth. Previously, the Democratic Party of Korea had opposed the creation of fiscal rules during the difficult economic period caused by the novel coronavirus infection (COVID-19), arguing that it could worsen the flexibility of fiscal management. In fact, Park Hong-geun, the ruling party's floor leader and chairman of the National Assembly Budget and Accounts Special Committee, pointed out, "Creating fiscal rules at this time could cause unnecessary social controversy."

Meanwhile, the draft prepared by the Ministry of Economy and Finance is known to include provisions similar to the European Union (EU) fiscal rules, managing the national debt ratio to GDP within 60% and the fiscal deficit within 3%, but with a broader application period.

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