Concerns are growing that the increase in Korea’s national debt will hamper long-term fiscal soundness. With demand for fiscal spending rising to finance expanded welfare programs amid the rapid aging of the population, there is bound to be a limit to raising tax revenue when economic growth is slowing.
In the aftermath of the deadly ferry sinking on April 16 that claimed more than 300 lives, state budget planners are also struggling to find ways to put aside money to enhance safety systems across the country.
Under these conditions, reducing wasteful expenditure is essential to meet fiscal demand without causing an increase in the government debt. The new economic team formed by President Park Geun-hye, who will get down to their work after going through parliamentary confirmation hearings, will have to focus on how to improve the efficiency and appropriateness of state-funded programs as well as measures to help boost the economic recovery.
The outcome of an inquiry by the Korea Institute of Public Finance, which was made public last week, revealed loopholes in projects undertaken by central and provincial governments. More than half of the 1,592 projects under scrutiny were evaluated as inefficient. Among them is a plan to construct a 5,820-km bike route along coastal areas by 2019 at the cost of more than 1 trillion won ($982 million). Most of the 14 sections completed last year are being used by few cyclists ― less than 10 per hour.
Feasibility studies should be strengthened to prevent money from being allotted for vanity projects that will bring few practical benefits to taxpayers. It should be followed by a thorough check throughout the course of a project to ensure the budget will be spent in a proper and efficient way.
It is also necessary to consider providing substantial incentives to public servants who have contributed to enhancing the efficiency of budget implementation.
The bereaved family of a student killed in the ferry disaster held his funeral at the minimal cost, saying they felt an obligation to save the taxpayers’ money used to support it. Government officials and politicians should learn a lesson from them.