Compensation of 100 Trillion Won Losses through Expenditure Adjustment and National Bond Issuance?..."Is National Finance a Joke?"

by Na Juseok

Published 13 Dec.2021 15:12(KST)

[Asia Economy Reporter Naju-seok] In the political circles of both ruling and opposition parties, the mention of an additional supplementary budget ranging from 50 trillion to 100 trillion won for COVID-19 loss compensation for small business owners has drawn criticism that "they seem to take national finances lightly."

Kim Jong-in, the General Election Committee Chairman of the People Power Party, is attending the Central Election Committee meeting held at the National Assembly on the 9th and delivering opening remarks. Photo by Yoon Dong-joo doso7@

On the 13th, Professor Woo Seok-jin of Myongji University appeared on MBC Radio’s ‘Kim Jong-bae’s Focus’ and argued that both securing funds and expenditures related to the 50 trillion won mentioned for small business loss compensation are difficult. Professor Woo said, "This year’s budget is 550 trillion won, and next year’s budget is about 600 trillion won," adding, "The 50 trillion won refers to the amount after excluding all this year’s increased budget. It is difficult to create that much. Also, even if you manage to create 50 trillion won, there must be grounds for expenditure, so spending it is difficult."

He also bluntly stated that there is "no plan" to secure the budget through emergency financial and economic command authority.

Professor Woo explained, "Among what Won Hee-ryong, head of the People Power Party’s policy headquarters, is saying, for example, using excess tax revenue exceeding 50 trillion won for damage support, that 50 trillion won was already fully used during the supplementary budget in the summer, which was 30 trillion won," adding, "There is 20 trillion won left, but after various adjustments by the Ministry of Strategy and Finance, the funds available for use in February next year are 6 trillion won."

Regarding raising funds through a fund, he said, "Even if a social solidarity tax or social solidarity levy is newly introduced to impose additional burdens on those who earned a lot of money or corporations during the COVID-19 period and collect that to use as recovery funds, it is impossible to raise 50 trillion won."

On expenditure structure adjustment, he said, "It is very difficult. About half of the budget structure is mandatory spending prescribed by law," adding, "While it is good to talk about securing funds through expenditure restructuring, in reality, it is difficult. It only accounts for a part, and saying that all funds will be secured this way is just a slogan or, in my view, fraudulent."

Regarding government bond issuance, he pointed out, "If you sell a lot of government bonds, the price of government bonds falls," adding, "When government bonds are issued, interest rates rise. That causes overall economic interest rates to increase, which burdens the economy."

Professor Woo commented on Kim Jong-in, the People Power Party’s chief election strategist and economic expert, mentioning 100 trillion won in loss compensation, saying, "There is an aspect of election slogans, and it was only possible during the Fifth Republic era."