"Indirect Use of Disaster Management Fund:
Is There Truly Public Consensus?"
Seoul Mayor Oh Sehoon emphasized, regarding the funding for the livelihood recovery consumption coupon program, "If the government tells local governments to raise funds by issuing local bonds, it tramples on the fiscal management philosophy of local government heads."
During the 332nd temporary session of the Seoul Metropolitan Council on August 29, in response to a related question from Yoon Younghee, a council member from the People Power Party, Mayor Oh stated, "Seoul has tightened its belt to reduce debt, but being told to suddenly take on 350 billion won in debt to issue consumption coupons all at once is something I find hard to accept."
For the livelihood recovery consumption coupon program, Seoul is the only one among the 17 metropolitan and provincial governments to receive a 75% national subsidy rate (compared to 90% for other regions). The city’s share for the first round of coupon distribution amounts to 350 billion won, and to secure this, the city has decided to issue local bonds of the same amount.
Mayor Oh said, "Issuing bonds and incurring debt for consumption coupons is something anyone would have concerns about. Furthermore, to issue local bonds, the Local Finance Act must be revised, but it has only passed the subcommittee of the Public Administration and Security Committee so far. Since funds are needed immediately, the city is proceeding with the legal revision while also resorting to irregular means to issue local bonds as a two-track approach."
He continued, "The plan is to utilize the disaster management fund, by issuing local bonds, putting them into the disaster management fund, and then reallocating them to the Integrated Fiscal Stabilization Fund. During the COVID-19 pandemic, there was a precedent for irregularly operating the disaster management fund in a disaster situation, but I question whether there is truly public consensus for using the disaster management fund as a detour for populist policies at the start of an administration."
He added, "I told the President directly that while I will cooperate this time, if this is repeated in the future, Seoul will find it difficult to cooperate. Even if there is debate about whether the consumption coupons have an economic stimulus effect, shifting the burden onto local governments is a very wrong practice."
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