The ruling Democratic Party of Korea, with an overwhelming majority in the National Assembly, is seeking to pass an extra budget bill of up to 30 trillion won ($25 billion) in a provisional session before the March 9 presidential election.
This is a move to meet its presidential candidate Lee Jae-myung’s demand for an extra budget to support pandemic-hit small businesses and merchants. Lee said it was right to give them the largest possible support through an extra budget, and that 25 trillion to 30 trillion won is deemed feasible.
The government opposed an extra budget at first, but seems to have had a change of heart. Finance Minister Hong Nam-ki said Monday the government plans to review whether to draw up another extra budget.
The main opposition People Power Party is not so strongly opposed, apparently to avoid losing votes to the DP candidate, so the extra budget is likely to come through.
An extra budget is supposed to be an emergency measure to deal with unexpected contingencies (such as natural disasters) along with main budget. Since the COVID-19 pandemic has lasted for more than two years now, it is not an “unexpected situation.”
Few could refute the need to compensate the self-employed for losses suffered due to social distancing restrictions. However, it was Dec. 3 last year when the 2022 budget bill passed the National Assembly. The party planned an extra budget just a month later. People cannot but ask what the party was doing when they reviewed the budget.
Furthermore, the budget for this year, which includes compensation to pandemic-hit businesses, increased to an all-time high of 607 trillion won.
The administration under President Moon Jae-in has provided about 22 trillion won in COVID-19 relief to small businesses through six extra budgets.
The fact that the party plans to pass an extra budget before the election stands to reason that it intends to secure funds needed to win over voters with cash. Were if not for the election, there would be no reason to draw up an unreasonable extra budget in a situation where the execution of the main budget has not started yet in earnest.
If additional support is needed for small merchants, the first thing to do should be to adjust existing items of the largest-ever 2022 budget. But the party and Lee didn’t even mention restructuring the existing budget. It’s probably because that will be of little help to getting votes immediately.
The Moon administration has drawn up extra budgets each year for five years since he took power. It would be the 10th one if passed this time. Extra budgets of the Moon administration have totaled more than 160 trillion won.
If the government has to draw up an extra budget, it has no other choice but to raise funds by borrowing from the public through sale of government bonds.
The national debt is expected to top 1,000 trillion won this year. None of the presidential candidates nor their rival parties regard the issue of fiscal soundness seriously.
The government should be the one pulling the reins on fiscal outlays, but it seems to be acting like it is part of the ruling party candidate’s campaign office.
Prime Minister Kim Boo-kyum announced late last year that the government would hand out 5 million won each to 550,000 small-business people in the first quarter to compensate for losses due to COVID-19 social distancing measures. The cash will be paid in advance, and losses calculated later when the aid will be settled up.
Just two weeks earlier, Kim was against the handout, but is reconsidering after Lee demanded it.
National financial resources are not inexhaustible. Lax management of state finances always comes with a price. Nothing is for free. Irresponsible expenditure increases may invite economic crisis.
By Korea Herald (firstname.lastname@example.org