Ruling Party and Government Re-push Introduction of Fiscal Rules... "Hearings Needed Since Moon Jae-in Administration"

People Power Party Holds 2nd Meeting of Fiscal and Tax Reform Special Committee
Also Reviews Bills Discussed in the 21st National Assembly
Ministry of Economy and Finance Responds Positively, Emphasizing Need to Enhance Fiscal Sustainability

The People Power Party has decided to re-push the introduction of fiscal rules in the 22nd National Assembly. The Framework Act on National Fiscal Management, which forms the basis of the fiscal rules, was deliberated in the previous National Assembly but was discarded without passing the relevant standing committee.

The party's Special Committee on Fiscal and Tax Reform held a forum at the National Assembly on the same day to discuss the introduction of fiscal rules. Song Eon-seok, the chairman of the special committee, told reporters after the forum, "I recall that in the 21st National Assembly, the bill included a provision to keep the ratio of total national debt to gross domestic product (GDP) at 60% and the deficit of the managed fiscal balance at 3%," adding, "We will form a subcommittee within the special committee to refine this and draft a bill reflecting the committee's opinion, including the previous contents."

Song Eon-seok, chairman of the People Power Party's Special Committee on Fiscal and Tax Reform, is speaking at the plenary meeting of the Special Committee on Fiscal and Tax Reform held at the National Assembly on the afternoon of the 18th.
[Image source=Yonhap News]

The special committee plans to form a subcommittee to review the fiscal rules-related bill that was created and discarded in the 21st National Assembly, as well as the fiscal soundness enactment bill that Chairman Song introduced on the 17th, and then propose a bill. The bill introduced by Chairman Song includes provisions to maintain the ratio of total national debt to GDP at 45% and to keep the deficit of the managed fiscal balance below 2%. This applies stricter standards than the existing fiscal rules bill.

Chairman Song countered the Democratic Party of Korea's proposal to hold a 'fiscal collapse hearing' due to tax revenue shortfalls by saying, "The first thing to investigate should be how the Moon Jae-in administration increased the national debt by 400 trillion won, from 600 trillion to 1,000 trillion won." Jin Sung-jun, the Democratic Party's Policy Committee chairman, said on the same day, "This government has continuously emphasized fiscal soundness and even proposed legislating fiscal rules for that purpose," adding, "The tax revenue shortfall is already severe and the fiscal condition is in disarray, yet they are bringing up tax cuts again." He further stated, "There is a need for a hearing on the state of national finances," and said, "What is really urgent now is to pour at least some seed money to revive domestic demand through livelihood recovery support funds."

Meanwhile, at the forum, the People Power Party criticized the Democratic Party of Korea for engaging in populist cash handouts such as regional currency budgets, showing symptoms of 'fiscal omnipotence' and 'fiscal addiction.' They argued that fiscal rules are essential to prevent this. In his opening remarks, floor leader Choo Kyung-ho said, "All countries around the world are wary of handout policies and populism. Ultimately, a debt binge can lead to a national crisis in an instant," emphasizing, "Because of this lesson, regardless of the government, administration, or political forces, it is crucial to maintain the country's finances and government finances soundly."

The government also supported the establishment of fiscal rules. Kim Yoon-sang, the 2nd Vice Minister of Strategy and Finance, stated, "While the legalization of fiscal rules may not be a necessary and sufficient condition to guarantee fiscal soundness, we believe it can enhance fiscal sustainability, and we will reflect this well in the process of legislating and operating them."

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