Assemblyman Jo O-seop Introduces 'Local Government Treasury Financial Soundness Act' as Lead Sponsor

[Asia Economy Honam Reporting Headquarters Reporter Yoon Jamin] Jo Oseop, Member of the National Assembly (Democratic Party of Korea·Gwangju Buk-gu Gap), announced on the 12th that he has taken the lead in proposing the "Local Government Treasury Financial Soundness Act (Partial Amendment to the Local Accounting Act)" to ensure the appropriateness of the agreed interest rates for local government treasuries.

According to the "Status of Public Deposit Interest Income of Local Government Treasuries Nationwide" recently released by the National Budget Research Institute, the total budget of local governments nationwide in 2021 reached 365.7 trillion won (excluding funds), which is deposited and managed in commercial banks designated as treasuries.

In the 2019 fiscal year, the average balance of treasuries in 243 local governments nationwide was 66.9 trillion won, and the public deposit interest income was 1.12 trillion won, resulting in an interest rate of 1.66%.

The interest rates vary greatly by local government: five places including Gyeongsan-si, Gyeongbuk (0.8%) had rates in the 0% range, 190 places had rates between 1% and 2%, 46 places between 2% and 3%, and two places had rates above 3%.

Current law stipulates that local governments designate banks, etc., as treasuries for cash and securities handling, custody, and other tasks, and when designating or changing such treasuries, they must announce major matters such as designation, change, contract period, and capital adequacy ratio.

However, the agreed interest rate on deposited cash, etc., is omitted from the announcement items, making important criteria for designating or changing treasuries unclear, and when issues arise regarding the appropriateness of the agreed interest rate, residents find it difficult to properly recognize them.

This amendment mandates that when local government heads designate or change treasuries, they must announce the agreed interest rate on cash deposits, thereby ensuring appropriateness and enhancing trust in cash management.

Assemblyman Jo Oseop said, "Announcing the appropriate agreed interest rate for treasuries will improve financial soundness through strengthening the treasury review function of local councils and enhancing transparency," and added, "I will do my best to establish legal and institutional measures to improve the poor local finances."

Meanwhile, this amendment bill, led by Assemblyman Jo Oseop, was co-sponsored by 10 members of the National Assembly including Kim Seungnam, Moon Jinseok, Song Gapseok, Yang Hyangja, Yoon Youngdeok, Lee Byunghun, Jo Eungcheon, Joo Cheolhyun, and Jin Sunmi.

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