|Finance Minister and Deputy Prime Minister Hyun Oh-seok answers questions from lawmakers during the parliamentary audit in Sejong on Wednesday. (Yonhap News)|
The Finance Ministry came under fire at the National Assembly on Wednesday over concerns about the country’s fiscal status and Minister Hyun Oh-seok’s alleged lack of leadership as the “economic control tower.”
Lawmakers from both the ruling Saenuri Party and the main opposition Democratic Party raised concerns about a sharp increase in state debt.
“Government debt has reached 443 trillion won ($415 billion) when household debt is already at 980 trillion won, (Korea) has become a debt-republic that has gone over the critical point,” the DP’s Rep. Choi Jeong-sik said.
“Stronger debt management standards need to be drawn up.”
Rep. Na Seong-lin of the Saenuri Party also questioned Hyun along similar lines, casting doubt on the government’s plans to achieve balanced finances by 2017.
According to Na, the Korean government’s income is projected to decrease by 0.5 percent next year, while expenditure is set to increase by 4.6 percent.
The legislators also raised concerns that the government may be too optimistic in projecting the country’s economic growth rate for next year.
The government projects that the country’s economy will grow by 3.9 percent in 2014.
“As an economic entity that affects the growth rate, the government is incapable of making an objective projection. During economic downturns, there is a trend of making optimistic projections,” Rep. Lee Man-woo of the Saenuri Party said.
“Alternatives such as lowering the growth projection when calculating the tax revenues are needed.”
DP lawmakers pressed the issue further, saying that the shortfalls in tax revenues were being caused by the optimistic economic outlook.
For his part, Hyun defended the projection saying that it was “very neutral” citing projections from other organizations that range from 3.8 percent to over 4 percent.
“The projection of 3.9 percent is based on the assumption that the results of the government’s policies reach their targets,” Hyun said. He added that stimulus measures that were rolled out during the first half of the year need to be continued through out the coming year, and that the projection also assumes that related regulations are passed by the National Assembly.
Regarding suggestions that the option of raising taxes should be left open, Hyun said that such steps would only be taken only if other measures fail.
“With regards to expenditure, pay-go regulations will be introduced to reduce unnecessary spending, and the underground economy will be regulated (to increase) tax income,” Hyun said.
“I think that the right order of things is to discuss tax raises with the public’s agreement, if the target is not satisfied by modifying other factors that can be changed.”
By Choi He-suk (email@example.com