Ongoing Controversy Over Fiscal Rules... Hong Nam-ki Caught in a Dilemma

Opposition 'Weak' · Ruling Party 'Why Now'... United in Criticism
Deputy Prime Minister Hong "The Pace of National Debt Increase Is Not Moderate"

[Image source=Yonhap News]

[Asia Economy Reporter Jang Sehee] There is ongoing controversy over whether the Korean-style fiscal rules announced by the government can properly manage fiscal soundness. The controversy is expected to escalate as the ruling party, the Democratic Party of Korea, has even hinted at dismissal remarks.

According to political circles on the 11th, there are opinions within the Democratic Party that the timing of the introduction of fiscal rules is inappropriate. A senior Democratic Party lawmaker pointed out, "I wonder if it will really be effective," adding, "If the role of finance is blocked by fiscal rules, it could cost more to restore it and cause problems such as tax revenue not being collected."

Democratic Party lawmaker Kim Doo-kwan said on the 8th, "If the introduction of fiscal rules is insisted upon, there will be aspects that cannot go along." He added, "The Ministry of Economy and Finance said they prepared for a long time and sought advice from many experts, and it seems that opinions were gathered mainly from scholars who agree with and support the fiscal rules." As criticism intensifies not only from the opposition but also within the ruling party, there is an analysis that the possibility of the fiscal rules passing the National Assembly this time is very slim.

The government announced on the 5th that it would introduce Korean-style fiscal rules to manage the national debt ratio to GDP at 60% and the integrated fiscal balance deficit ratio within -3% starting from 2025.

Deputy Prime Minister and Minister of Economy and Finance Hong Nam-ki said, "The speed of increase in national debt and fiscal deficit is not gradual. Since the COVID-19 crisis is ongoing, it is difficult to apply it immediately from next year, so we presented it now with the meaning of preparing for about four years," showing no wavering in his conviction.

Meanwhile, the government plans to submit a revision bill of the National Finance Act containing the fiscal rules to the National Assembly in November, but it is uncertain whether discussions will proceed swiftly.

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