Among Advanced Countries, Fastest National Debt Increase... Ruling and Opposition Presidential Candidates Compete in 'Money Spraying'

IMF "Han, Fastest Increase in National Debt Among 35 Advanced Countries"
National Debt Estimated at 66.7% of GDP by 2026
Lee's Universal Support Fund & Yoon's 50 Trillion Support for Self-Employed... Hong Nam-gi "Difficult"

Lee Jae-myung, the Democratic Party presidential candidate (left), and Yoon Seok-youl, the People Power Party presidential candidate (right).
[Image source=Yonhap News]

[Asia Economy Reporter Heo Midam] As the lineup for the 20th presidential election next year has been finalized, the presidential race is heating up, and a debate has erupted among the candidates over support measures for COVID-19 damage. Lee Jae-myung, the Democratic Party candidate, proposed additional disaster relief payments to all citizens, while Yoon Seok-youl, the People Power Party candidate, announced plans to inject 50 trillion won to fully compensate self-employed business owners for their losses. However, the government has expressed direct opposition to both candidates' cash support plans.

Citizens are also voicing concerns. With the national debt rapidly increasing, the emergence of large-scale cash support pledges has raised worries about the collapse of the country's finances. Experts predict that such pledges will not have a significant impact on public sentiment.

On the 8th, Lee criticized Yoon's plan to inject 50 trillion won to compensate self-employed business owners, saying it "could be seen as mocking the people."

On the same day, Lee posted on Facebook under the title "Candidate Yoon Seok-youl, Livelihood Comes Before Politics," stating, "While you oppose the 13 trillion won support paid in local currency like last year's first disaster relief payment, which has the dual effect of supporting household income and increasing sales for small business owners, you say you will provide 50 trillion won once you become president. This could be seen as mocking the people."

He added, "I hope your stance is not simply to oppose the opponent's claims unconditionally and to adopt a populism approach of promising to do it later without any funding plans once you become president."

In an interview with Chosun Ilbo on the 7th, Yoon said, "We will inject 50 trillion won during the first 100 days of the new government to compensate for losses caused by government-imposed business restrictions," and added, "Small, piecemeal support like the universal disaster relief payments proposed by Lee is not acceptable."

Lee Jae-myung, the Democratic Party presidential candidate, is giving a greeting during his visit to the Korea Christian Federation at the Korea Christian Hall in Jongno-gu, Seoul on the 8th.
[Image source=Yonhap News]

Lee mentioned financial support earlier than Yoon. On the 31st of last month, Lee said, "I think it should be 1 million won per person, but currently about 480,000 to 500,000 won has been paid," and argued, "In the COVID-19 situation, an additional minimum of 300,000 to 500,000 won should be provided."

Both ruling and opposition presidential candidates have proposed large-scale cash support measures for COVID-19 damage, but Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, expressed that all of these are "difficult."

During a comprehensive policy inquiry at the National Assembly Budget and Accounts Special Committee, Hong drew a line on Lee's proposal for additional universal disaster relief payments, saying, "Given various conditions, there probably won't be a supplementary budget this year, and payments within the year seem difficult."

Regarding Yoon's statement on 50 trillion won compensation for self-employed business owners, Hong expressed a negative view, saying, "Most of it would require issuing deficit bonds, so financially it doesn't seem easy."

Criticism has also come from within the political sphere. Ahn Cheol-soo, the People's Party presidential candidate, criticized Lee and Yoon, saying, "Candidates abandoned by the younger generation are engaging in a populist competition that betrays the youth."

Through his Facebook, Ahn said, "Instead of policy debates, they are gambling. The two establishment party candidates have started a money war using the national debt as the stakes. In the end, whoever wins, it looks like the future of the youth is being exploited."

Yoon Seok-yeol, the People Power Party's presidential candidate, is delivering a greeting at the current issues briefing held at the National Assembly on the 8th.
[Image source=Yonhap News]

Meanwhile, concerns have grown as forecasts indicate that South Korea's national debt will increase at the fastest rate among 35 major countries relative to economic size over the next five years.

According to the recent 'Fiscal Monitor' report by the International Monetary Fund (IMF), South Korea's general government gross debt as a percentage of GDP is expected to reach 66.7% by 2026, five years from now. This is an increase of 15.4 percentage points from the 51.3% at the end of this year, the highest among 35 advanced countries classified by the IMF, and the only one with an increase in the double digits.

The problem is that due to low birth rates and aging population, the number of taxpayers will decrease while the number of beneficiaries of tax spending will increase, making fiscal deterioration inevitable.

Given this situation, a significant number of citizens oppose populist policies. A 30-something office worker, Mr. A, said, "The national debt we will have to bear is already high, so I don't understand why they keep wanting to give out money. Isn't it money we will eventually have to repay through taxes?" He added, "We should repay the national debt and create a world where young people can live comfortably, but everyone is trying to distribute money, which worries me."

Another office worker, Mr. B, raised his voice, saying, "If cash keeps being given out, who will want to work? Also, such cash support will ultimately become a burden on the people."

Experts predict that cash support pledges will not have a positive effect on public sentiment. Political commentator Lee Jong-hoon said, "Both candidates believe cash support policies are helpful, which is why they are making such pledges. However, recent opinion polls show that citizens are rather opposed to cash support policies, so there are negative effects as well. For example, in the April by-elections for Seoul and Busan mayors, Park Young-sun, then Seoul mayoral candidate, proposed 'half-price apartments,' but it did not significantly affect the election results."

He added, "This presidential election has a strong sentiment of judging the current administration. Therefore, cash support will not shake public sentiment. The sincerity of the pledges is also greatly diminished," he pointed out.

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