Former Finance Minister Kim Jin-pyo: "Kim Jong-in's 100 Trillion? Remarks Made Without Knowing the Budgeting Process"

[Image source=Yonhap News]

[Asia Economy Reporter Park Cheol-eung] Kim Jin-pyo, head of the Emergency Economic Countermeasures Headquarters of the Democratic Party of Korea, sharply criticized the Future United Party's claim of 'restructuring the budget by 100 trillion won,' saying it is "nothing but words made without knowing the budget allocation process." He is a former Ministry of Finance official who served as Deputy Minister of Finance, Minister of Strategy and Finance and Deputy Prime Minister during the Participatory Government, and is currently a key economic expert in the ruling party.

On the 9th, through a Q&A with Asia Economy, Head Kim stated, "The budget is created by collecting individual project budgets, which are discussed and agreed upon by the working-level officials and budget demanders of each ministry based on feasibility and field needs during the budget cycle (about one year)." He emphasized, "The entire budget is made by gathering individual project budgets, and then the ruling and opposition parties negotiate to revise and supplement it. To restructure and extract 100 trillion won again is an impossible task."

Kim Jong-in, the Future United Party's general election campaign committee chairman, has argued for securing about 100 trillion won, approximately 20% of this year's budget, by selecting necessary or non-urgent items to secure funds for support against the novel coronavirus infection (COVID-19). The intention is to do so without additional burden on the public, and the 500,000 won per person payment proposed by Future United Party leader Hwang Kyo-ahn could be funded through this.

Head Kim said, "I want to accept it as a meaning to actively respond to COVID-19, but it is a statement made without understanding," adding, "It could only cause confusion." He viewed that budgets unused due to falling oil prices, interest rates, and COVID-19 could be repurposed as a countermeasure. However, Head Kim pointed out, "The government has already made a supplementary budget of 11.7 trillion won and injected a budget of 100 trillion won plus alpha through the Emergency Economic Meeting. It is realistic to have a second supplementary budget after the general election, including emergency disaster relief funds, to maintain demand and production bases."

He also dismissed the controversy over 'handouts' for the general election raised by some. Head Kim said, "Many experts expect COVID-19 to reach a turning point in about six months," adding, "If the consumption base collapses due to unemployment during that period, there is a risk of a chain collapse of production and financial bases like the 1997 foreign exchange crisis. Preventing that is important, so all countries in the world are trying to maintain production and consumption bases through fiscal policy."

It is a time to boldly and swiftly inject fiscal resources. He also cited that Korea's fiscal soundness ranks 4th among OECD member countries, emphasizing, "There is sufficient fiscal capacity to respond to the economic downturn and COVID-19."

Just as necessary budgets were used during past International Monetary Fund (IMF) foreign exchange crises and global financial crises and later managed to return to the proper track, it should not be judged with a short-term view. Head Kim said, "Fiscal policy should not be judged as good or bad based on a single year," adding, "It should be managed with a mid-term perspective to converge on balance on average."

He added, "In February, the IMF recommended monetary policies for economic stimulus to respond to COVID-19 in its 'G20 Outlook Report.' This is because our government has fiscal capacity."