Budget Subcommittee Fails to Pass Fiscal Rules Bill…Opposition Demands Concurrent Discussion of Economic Stimulus Measures

與 "Excessive Government Spending Due to COVID-19"
野 "Caution Needed in Low-Growth Era"

A bill related to fiscal rules that manage the national debt ratio below a certain level failed to pass the National Assembly due to differences in opinion between the ruling and opposition parties. The fiscal rules are expected to be discussed again after the regular session of the National Assembly in September.

On the 27th, the Economic and Fiscal Subcommittee of the National Assembly's Planning and Finance Committee discussed a partial amendment to the National Finance Act, which centers on the legalization of fiscal rules. The bill aims to manage the deficit ratio of the management fiscal balance to within 3% of the Gross Domestic Product (GDP). The core idea is to reduce the deficit to within 2% if the national debt ratio exceeds 60%, maintaining this ratio around 60% in the mid to long term.

On that day, the ruling and opposition parties only confirmed their differences and failed to reach an agreement. The government and the ruling party argued for the necessity of fiscal rules, citing excessive government spending during the COVID-19 recovery process and the deterioration of fiscal soundness. Meanwhile, the Democratic Party reportedly stated that it should be cautious to legally restrict government spending at a time when the low-growth phase is prolonged.

People Power Party leader Kim Ki-hyun is delivering a negotiation group representative speech at the plenary session held at the National Assembly on the morning of the 20th.
[Photo by Yonhap News]

Democratic Party lawmaker Seo Young-kyo told reporters during the meeting, "The increase in household debt and the decrease in tax revenue indicate that the economy is worsening," adding, "They propose discussing fiscal rules along with solutions, but there has been no talk about that." She continued, "It is a very good idea to pay off debt if there is money, but there should also be a plan for what to do when the economy is difficult," adding, "A plan is needed to reduce both national and household debt together."

However, the Democratic Party does not intend to pass the bill by linking the 35 trillion won supplementary budget proposed by leader Lee Jae-myung with the introduction of fiscal rules. After the meeting, Yoo Dong-soo, the opposition party's secretary of the Planning and Finance Committee, told reporters, "There is no intention to handle the fiscal rules and supplementary budget together."

There were also remarks emphasizing that the government’s efforts to restructure spending and improve fiscal soundness should precede the introduction of fiscal rules.

Lawmaker Yoo said, "If the government makes a major effort to delete unnecessary budgets and consolidate overlapping functions, it can be seen as progress toward fiscal soundness," adding, "If substantial efforts for fiscal soundness are a prerequisite, the introduction of fiscal rules can be fully accepted."

The People Power Party stated that it plans to reopen the Planning and Finance Subcommittee soon to continue discussions.

Ruling party secretary Ryu Seong-geol said, "We will schedule it as soon as possible," adding, "Since the full Planning and Finance Committee meeting is scheduled for July 5, it will be held before then."

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