[2020 National Audit] Lee Ju-yeol's 'Strict Fiscal Rules' Remark... Ruling Party: "Are You Criticizing Government Policy?"

October 16 Bank of Korea National Audit
Ruling Party Criticizes Call for 'Strict Fiscal Rules'... Governor Lee Says "Active Fiscal Policy Needed Now"

On the 16th, Lee Ju-yeol, Governor of the Bank of Korea, appeared at the National Assembly's Planning and Finance Committee for the audit of the Bank of Korea and took the witness oath. Photo by Yoon Dong-ju doso7@

[Asia Economy Reporter Jang Sehee] During the National Assembly's Public Administration and Finance Committee hearing on the 16th, the ruling Democratic Party of Korea strongly criticized the remarks of Lee Ju-yeol, Governor of the Bank of Korea, who emphasized the need for strict fiscal rules.

Democratic Party lawmaker Yang Kyung-sook pointed out, "It is a sensitive situation as the introduction of fiscal rules is being discussed, yet even the Governor of the Bank of Korea, an independent institution, is adding fuel to the controversy."

Lawmaker Yang criticized, "During the severe period of the novel coronavirus disease (COVID-19), the Bank of Korea has failed to fulfill its fundamental role properly and has not proposed alternatives, instead interfering with government policies." She added, "We must proactively implement expansionary fiscal policy to overcome the economic recession, even if it means incurring debt."

Fellow party member Park Hong-geun also stated, "The International Monetary Fund (IMF) has recommended temporarily suspending the application of fiscal rules when they exist," and emphasized, "The central bank needs to enhance its role by observing global trends." In response, Governor Lee said, "My previous remarks regarding fiscal rules are essentially in line with the IMF's assessment."

On the 13th (local time), the IMF stated that while continuing to provide necessary policy support during a prolonged crisis, it is also important to secure fiscal capacity in preparation for future increases in fiscal spending.

Governor Lee concluded, "I did not say that fiscal rules must be strictly enforced unconditionally." He added, "In the current situation, active fiscal policy is more necessary than ever," and explained, "In such circumstances, strict austerity should not be pursued, but strict rules should be introduced during normal times after the crisis."

Earlier, Governor Lee had stated regarding the fiscal rules recently prepared by the government, "Strict fiscal rules are necessary to maintain long-term fiscal soundness."

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