Hong Nam-ki: "Finance is not a bottomless pit... Deeply considering compensation for losses on an 'uncharted path'"

Hong Nam-ki, Deputy Prime Minister for Economy and Minister of Strategy and Finance [Image source=Yonhap News]

[Asia Economy Reporter Son Sun-hee] Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, stated on the 22nd regarding the legislation of compensation for business restriction losses due to COVID-19 quarantine measures, "No one has 'walked this path before,' so there are many aspects to carefully consider," but added, "However, since the treasury is not an inexhaustible source, we must always remember that fiscal conditions and funding availability are important policy variables to consider."

On the same day, Hong posted on his social media (SNS), "Regarding the legislative institutionalization of compensation for business restriction losses, several lawmakers have already proposed draft bills, so the Ministry of Economy and Finance is currently conducting internal reviews, recognizing the need to respond in some form," he wrote.

Recently, led by the ruling party, legislation to compensate self-employed and small business owners who suffered sales losses due to government-imposed business restrictions and bans is being promoted. However, fiscal authorities cannot ignore the limited resources available.

Hong also addressed this issue, saying, "It is the duty of fiscal authorities to examine who should be paid, how much, the criteria for payment, the required funding, and whether it is manageable," and explained, "There was even a report that if a certain lawmaker's proposal were implemented, it would require 24 trillion won per month, and paying for four months could reach 100 trillion won, which is half of our country's welfare budget." He continued, "There is no disagreement with the proposition that the treasury should play an active role as the last line of defense in a national crisis," but expressed concern, "Fiscal conditions are deteriorating as national debt is rapidly increasing while overcoming the COVID-19 crisis."

In fact, the issuance of deficit bonds reached about 104 trillion won last year, is expected to be about 93.5 trillion won this year, and is projected to exceed 100 trillion won next year. Consequently, the total national debt is expected to surpass 1,000 trillion won for the first time next year.

Hong Nam-ki said, "We will deeply consider and review the institutionalization plan for compensation for business restriction losses," and added, "We will honestly communicate and coordinate the difficulties and limitations faced by fiscal authorities."