Ministry of Economy and Finance Urges "Introduction of Fiscal Rules" Ahead of National Assembly Deliberation

Economic Subcommittee Meeting of the National Assembly's Strategy and Finance Committee on the 15th-16th

The Ministry of Economy and Finance emphasized the necessity of fiscal rules ahead of the two-day Economic and Fiscal Subcommittee meeting of the National Assembly's Planning and Finance Committee starting on the 15th.

The Planning and Finance Committee plans to hold the Economic and Fiscal Subcommittee meetings on the 15th and 16th to review bills including the amendment to the National Finance Act (Fiscal Rules Act) for the introduction of fiscal rules, and then hold a plenary session on the 22nd to pass the legislation. On the same day, the Ministry of Economy and Finance released reference materials stressing that "the introduction of fiscal rules is urgent to maintain fiscal sustainability and reserve fiscal capacity for future preparedness."

The Ministry forecasted that the fiscal situation will become more challenging given the recent significant increase in national debt due to expansionary fiscal policy and the chronic large-scale deficits, along with expenditure factors for structural responses such as aging. It explained, "Fiscal rules have been introduced in 105 countries and are a universal system adopted by all OECD member countries except South Korea and T?rkiye," adding, "International organizations and credit rating agencies are paying attention to the legislation of fiscal rules, and their enactment is expected to have a positive impact on credit ratings."

The Ministry also projected that the introduction of fiscal rules would alleviate the interest burden on national debt. It evaluated, "With the legislation of the rules and inclusion in the World Government Bond Index (WGBI), international trust in Korean government bonds will increase, contributing to a reduction in bond issuance costs." Furthermore, citing the long-term fiscal outlook by the National Assembly Budget Office that without fiscal rules, the national debt per working-age person will reach 100 million won by 2040, the Ministry emphasized, "Fiscal rules are necessary to prevent excessive debt repayment burdens on future generations."

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