[Column] Presidential Election Supplementary Budget... 'Money Feast' Ends, 'Debt Feast' Begins

[Asia Economy Reporter Oh Ju-yeon] The ruling and opposition parties have for once agreed on the first supplementary budget of the new year. They share the view that the government's proposed supplementary budget of '14 trillion won' is insufficient and needs to be increased. Since the ruling and opposition presidential candidates have each mentioned the need for supplementary budgets of 25 trillion won and 50 trillion won respectively, if the government submits a 14 trillion won supplementary budget proposal to the National Assembly next week, it is highly likely that everyone will call for "double down."

Photo by Oh Ju-yeon

Both parties have reached a consensus that "it should be given broadly and generously." Park Wan-joo, the Policy Committee Chair of the Democratic Party, said, "We must take responsibility for the difficulties faced by self-employed workers who have been outside government support, such as special employment workers, freelancers, cultural artists, and corporate taxi drivers." Kim Ki-hyun, the floor leader of the People Power Party, also emphasized, "The upper limit of the small business COVID-19 recovery support fund, currently 1 million won, should be increased up to 10 million won, and the compensation rate, currently 80%, should be expanded to 100%." They seem to be turning a deaf ear to concerns about fiscal soundness collapsing.

The government plans to finance most of the 14 trillion won through deficit bond issuance. This is because, despite the projected excess tax revenue being 10 trillion won more than last year's expected 19 trillion won, legal restrictions prevent its use. Issuing government bonds means paying interest with taxes. This could mean that the pre-election "money party" ends as a post-election "debt party." The issue of fiscal soundness will inevitably fall on the next administration.

However, the possibility that this year's supplementary budget will end with this one time is virtually zero. The new government, which will be inaugurated in May, will also inevitably have to prepare supplementary budgets to strengthen projects. This year, national debt is expected to exceed 1,000 trillion won, and the possibility of further increases cannot be ruled out.

The opposition floor leader is said to visit the Ministry of Economy and Finance on the 19th to protest and demand an increase in the supplementary budget. It seems like a determination to do anything for victory in the presidential election. One of the ruling or opposition parties will take the next administration. I want to ask if they have plans to make the national finances solid.