"Processing After Public Opinion Collection"... Ruling and Opposition Parties Postpone 'Preliminary Feasibility Study Easing Law' Amid Populism Controversy (Summary)

7-Night 9-Day Europe Business Trip Scheduled as Planned Amid Fiscal Rule Controversy

The National Assembly failed to pass the amendment to the National Finance Act on the 17th, which included easing the exemption criteria for preliminary feasibility studies (PFS) that assess the economic effects of new public investment projects such as social overhead capital (SOC).

The National Assembly's Planning and Finance Committee postponed the plan to table and approve the National Finance Act at the plenary session held at the National Assembly in the afternoon. The amendment mainly aimed to raise the exemption threshold for PFS projects from a total project cost of 30 billion KRW to 50 billion KRW, and from 50 billion KRW in national funds to 100 billion KRW. Yoon Young-seok, a member of the Planning and Finance Committee from the People Power Party, stated at the meeting, "For further discussion, the chairman decided in consultation with the floor leader not to table the bill today."

Although the ruling and opposition parties unanimously passed the bill easing the PFS exemption at the Economic and Fiscal Subcommittee of the Planning and Finance Committee on the 12th, they decided to slow down the bill's processing amid criticism that populist local projects could be indiscriminately launched with the general election a year away.

On the 17th, Shin Dong-geun, the Democratic Party whip, and Ryu Seong-geol, the People Power Party whip, are having a conversation at the Planning and Finance Committee plenary meeting held at the National Assembly. Photo by Kim Hyun-min kimhyun81@

Yoon Jae-ok, floor leader of the People Power Party, said at the Supreme Council meeting held that day, "There is growing public concern about whether easing the PFS exemption is desirable amid the worsening fiscal soundness. This concern is not a matter of the ruling or opposition parties but a problem for the entire political sphere," adding, "Therefore, considering the difficult livelihood situation, it is necessary to carefully proceed with the bill after gathering public opinion."

Yoon also expressed the position that the amendment to the National Finance Act introducing fiscal rules, which was postponed this month, should be re-pursued. He urged the Democratic Party, saying, "The discussion on legislating fiscal rules, which was delayed due to the Democratic Party's opposition, should resume. As a non-reserve currency country that relies on trade, our nation's survival depends on fiscal soundness."

With the delay in passing the bill easing the PFS exemption, the ruling party is reportedly reconsidering linking it with fiscal rules.

Regarding this, Shin Dong-geun, the opposition floor leader of the Planning and Finance Committee from the Democratic Party, told reporters, "The ruling party said they would not table the bill they initially proposed," adding, "It seems they wanted to consider various public opinions."

Shin further criticized, "Both the Semiconductor Act last time and this bill were proposed by the ruling party, but when other opinions emerged, they reversed their stance. This causes problems with policy trust," and pointed out, "There are issues of trust between the ruling and opposition parties and also problems in terms of policy consistency."

Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho and Second Vice Minister Choi Sang-dae are conversing at the plenary meeting of the Planning and Finance Committee held at the National Assembly on the 17th. Photo by Hyunmin Kim kimhyun81@

He also expressed a negative stance regarding the introduction of fiscal rules. Shin said, "I think there is a slight difference in perspective because I believe a more active role of fiscal policy is needed at this time," adding, "Fiscal rules should not be treated as a magic wand that solves everything."

Ryu Seong-geol, the ruling party floor leader of the Planning and Finance Committee from the People Power Party, explained about easing the PFS exemption criteria, "Many media outlets were quite worried, and there was a misunderstanding that the political sphere might be colluding populistically."

Regarding fiscal rules, he said, "If the PFS-related matters are linked, it will take longer and require more consultations."

At the plenary session that day, the Planning and Finance Committee approved amendments to the Statistics Act (alternative bill) and the Basic Act on Levy Management (revised bill), excluding the PFS-related bill.

Meanwhile, five members of the Planning and Finance Committee are scheduled to depart on a 7-night, 9-day business trip to Europe from the 18th to the 27th. The purpose is to share experiences of countries such as France, Germany, and Spain that have undergone fiscal crises.