Namwon-si Faces Government Austerity 'Emergency'... Begins Expenditure Restructuring

Published 23 Aug.2023 15:11(KST)

Namwon City in Jeonbuk is facing difficulties in securing national funds due to the government’s unprecedented fiscal tightening policy, and local governments nationwide are on alert amid factors such as the economic downturn.

According to the city on the 23rd, the government’s stringent expenditure restructuring and the reduction of local allocation tax due to decreased national tax revenue are expected, raising concerns about significant disruptions in financial management, especially since the city’s fiscal independence is currently at the lowest level.

Exterior view of Namwon City Hall. [Photo by Namwon City]

With poor self-generated revenue and high dependence on central government subsidies such as allocation tax, the city is expected to find it difficult to cope with the rapidly increasing fiscal demand pressure through belt-tightening austerity measures alone. Therefore, it plans to actively implement bold expenditure restructuring measures by reconsidering investment and subsidy projects from the ground up.

First, major financial investment projects and annually recurring event projects for the 2022 fiscal year will be fully reviewed from the ground up. Projects rated ‘Excellent’ or higher in the evaluation will maintain their budgets, while those rated ‘Unsatisfactory’ or lower will face budget cuts.

Second, to enhance the performance evaluation of local subsidy projects and various group subsidy projects, the city will improve the evaluation method it has been conducting independently by commissioning the Local Administration Research Institute, a professional service agency, to conduct a performance evaluation of all subsidy projects. The results will be submitted by the end of this month and actively reflected in next year’s budget through measures such as budget cuts, suspension of support, or continued maintenance.

Following the Ministry of the Interior and Safety’s announcement on the 3rd of the ‘Strengthening Measures for the Sound and Responsible Operation and Management of Local Subsidies,’ the city plans to abolish or cut budgets for projects found to have fraudulent claims and those with poor evaluations when preparing next year’s budget, and to abolish or consolidate similar or overlapping projects as part of a full review of local subsidy project budget allocation.

A city official said, “In line with the government’s policy, strong fiscal innovation is inevitable to secure investment resources,” adding, “The savings generated from expenditure restructuring will be used to improve citizens’ quality of life, safety, and welfare.”