Kim Tae-nyeon "US-Korea Interest Rate Gap at Record High, Careful Use of Foreign Exchange Reserves Needed"
The ruling Democratic Party condemned the government's consideration of using funds such as the Foreign Exchange Equalization Fund (Oepyeong Fund) to cover the unprecedented tax revenue shortfall, calling it "reckless borrowing" and "a blatant case of window dressing accounting."
On the 6th, Kim Tae-nyeon, Chairman of the Democratic Party's Committee for Crisis Response in the Livelihood Economy, stated in a press release, "The Yoon Seok-yeol administration, which has caused an unprecedented tax revenue hole, now says it will even touch the funds," adding, "This is reckless borrowing. It is a low-level trick to disguise the national debt ratio while accumulating debt. It is truly window dressing accounting."
Regarding this, Chairman Kim also said, "From the numbers alone, it may seem like a process of achieving sound fiscal management, but to the public, it looks like a prodigal who secretly breaks insurance and steals emergency funds."
Kim Tae-nyeon, a member of the Democratic Party of Korea, is delivering a welcoming speech at a joint seminar for creating better laws held at the National Assembly Members' Office Building on the 10th. Photo by Kim Hyun-min kimhyun81@
He explained about the measure, "Every government fund has its own purpose, which is why I liken them to insurance," emphasizing, "In particular, the Foreign Exchange Equalization Fund is an emergency fund to prepare for sudden exchange rate fluctuations. Last October, Japan sold approximately 5.5 trillion yen (about 53 trillion won) worth of dollars to defend the yen. Since astronomical funds may be needed in emergencies, the exclusive use of the Foreign Exchange Equalization Fund requires utmost caution."
Referring to the record-high interest rate differential between Korea and the U.S., Chairman Kim criticized, "We don't know when or where a trigger might explode, so if you recklessly dip into the fund like picking at dried persimmons, will there be any capacity to respond in a crisis?" He added, "We don't know when the trade balance will recover, so does it make sense to 'pull out all stops' even from the Foreign Exchange Equalization Fund?"
He continued, "Public funds are not contingency funds to cover the government's fiscal shortfall," and questioned, "Should we have to exhaust even the emergency funds instead of returning taxpayers' money to the people?"
He stated, "The Yoon Seok-yeol administration's incompetent fiscal management skills have clearly reached their limit. Blaming the previous administration no longer works," and added, "Fiscal soundness is merely a means, never an end. I hope they remember that the purpose of fiscal policy is the sustainable development of our society."
Earlier, Hong Sung-guk, the Democratic Party's floor spokesperson, also criticized the issue, saying, "In the first half of the year, the Bank of Korea temporarily borrowed 113 trillion won as a 'cash service' to cover the shortfall, and now they are even breaking into 'savings and deposit accounts' to cover the fiscal deficit." He pointed out, "It's no different from breaking into savings, deposit, and subscription accounts when household living expenses are insufficient, and if money is still lacking, covering it with short-term loans." Hong said, "Funds are not meant for this," and warned, "If you pay debt with debt, the debt will only increase."
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