A Stern Warning from Former Ministry of Economy and Finance Officials: "The Treasury Is Not an Inexhaustible Spring"

60th Anniversary of the Establishment of the Five-Year Economic Development Plan

Bureaucrats who have been in charge of economic and fiscal policies over the years voiced criticism against populist claims surrounding fiscal matters. Emphasizing the importance of a sound fiscal stance, they stressed that a supplementary budget is currently unnecessary. They advised that Korea's growth strategy should involve a private sector-led structural transformation and reform, along with the efficient allocation of production factors.

On the 25th, at the Fairmont Hotel in Yeongdeungpo-gu, Seoul, an event marking the 60th anniversary of the establishment of the Five-Year Economic Development Plan was held under the theme "Today and Tomorrow of the Korean Economy." The event saw the full attendance of senior figures who had served as Deputy Prime Ministers for Economic Affairs and Ministers of Strategy and Finance, alongside Deputy Prime Minister and Minister of Strategy and Finance Choo Kyung-ho.

Jang Byung-wan, a former lawmaker who served as Minister of Planning and Budget under the Roh Moo-hyun administration from 2006, told the media, “There are many claims in some political circles based on populism, treating fiscal resources as if they were an inexhaustible spring.” He criticized, “It is like the old saying 'tricking the morning and evening'?taking what should be eaten in the evening and eating it at noon, only to starve in the evening.” He added, “This deceives the public, and policies should not be made that way.”

Former Deputy Prime Minister Yoo Il-ho argued, “Overall, fiscal spending should be directed with concern for debt, but necessary expenditures should be made while cutting so-called unnecessary spending.” Former Deputy Prime Minister Jin Nyeon, when asked about fiscal rules, said, “I was the one who relaxed the preliminary feasibility study as part of a sound fiscal plan,” but criticized, “With this kind of mindset, such as easing the exemption criteria for feasibility studies, fiscal soundness cannot be secured. The media should point out the government's mistakes.”

Regarding recent calls in political circles for supplementary budget formation, the prevailing view was that it is not immediately necessary. Former lawmaker Jang said, “Supplementary budgets should be made only when absolutely necessary,” and explained, “Fiscal resources are the last resort for various policies, and supplementary budgets should be made when the country is in difficulty. It is absolutely necessary to legislate fiscal rules so that supplementary budgets do not become routine.” Former Deputy Prime Minister Yoo also responded, “I do not think supplementary budgets should be made when fiscal conditions are difficult. If the fiscal environment is good, supplementary budgets can be made anytime?I have done so myself?but that is not the case now.”

However, Hong Nam-ki, former Deputy Prime Minister who led the 4th supplementary budget under the Moon Jae-in administration, avoided giving a direct answer regarding the expansionary fiscal stance during the COVID-19 period.

"Three Major Reforms Are a Given and Must Be Boldly Implemented"

On the 25th, Choi Kyung-hwan, former Minister of Strategy and Finance, who attended the '60th Anniversary International Conference on the Establishment of the Five-Year Economic Development Plan' held at the Fairmont Hotel in Yeouido, is greeting the participants. [Image source=Yonhap News]

Advice was also given that Korea’s economic structure must be changed through reform policies to achieve growth. Former Deputy Prime Minister Choi Kyung-hwan stated, “The economy improves efficiency when production factors are efficiently allocated and utilized,” adding, “Production factors ultimately mean people, money, and technology, and there is a concern about whether these production factors are operating well within the system.” He continued, “How to implement this is the key, and it is a measure of our society’s problem-solving ability,” while criticizing, “The highest-level structure is politics, but NATO (No Action, Only Talk) continues endlessly.”

Former Deputy Prime Minister Jeon Yoon-chul said, “We have used a state-led development strategy so far, but this inertia still remains in our society. We must overcome this quickly,” and urged, “Global competition is intensifying, so we need to find a blue ocean quickly.” He added, “To do this, we must win through creativity development. At the same level, bold reforms of the public sector, including regulatory reform, are necessary.”

Former Deputy Prime Minister Hyun Oh-seok also said, “The three major reforms (labor, education, pension) must obviously be done,” adding, “We must also consider the changed conditions.” He continued, “Initially, we led with exports, but as competitiveness declined, we shifted to heavy and chemical industries, and then in the era of openness, we changed strategies to fit openness,” and said, “Now, the potential growth rate is falling, so we must overcome internal problems such as low birth rates and reforms well.”

Former Minister of Strategy and Finance Kang Kyung-sik said, “I am not going to say how to do it,” but added, “It is necessary to gather all good ideas, encourage discussion, and lead to conclusions. For specific issues, reform ideas should be well collected from young people.”

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