Minister Park Hong-geun of the Ministry of Planning and Budget said the government will "raise Korea's economic growth rate to lower the ratio of national liability to gross domestic product (GDP)." He said fiscal soundness is currently being thoroughly managed through "expenditure restructuring," and signaled a negative view on introducing a "fiscal rule," saying, "Even the European Union (EU) set one up but can't keep it."
Minister Park rebutted a recent International Monetary Fund (IMF) report that pointed out that "Korea's liability is growing at a fast pace" at a press briefing held at the Government Complex Sejong on the 21st. Earlier, the IMF, in its recent Fiscal Monitor report, said Korea's government liability ratio would rise from 54.4% this year to 63.1% in 2031, voicing concern about a "surge in liability."
Minister Park said, "Looking back after past IMF reports, most of the actual projections were overestimated," adding, "We are thoroughly managing the pace of liability growth with various safeguards." As examples, he cited this year's record-high 27 trillion won expenditure restructuring, and plans to restructure 10% of mandatory expenditure and 15% of discretionary expenditure next year.
He said, "Countries like Sweden and the Netherlands lowered their liability ratios by expanding GDP," adding, "There is a 'right time' when running national finances. We will make every effort to invest properly at the right time to boost the growth rate."
Asked whether any excess tax revenue would be used to pay down the national debt, he said, "We will follow the procedures stipulated in the National Finance Act, such as world surpluses, repayment of public funds, and repayment of Government Bonds." In response to criticism that the Moon Jae-in administration hurt fiscal soundness by spending excess tax revenue instead of paying down debt, he said, "There is also a (positive) assessment that Korea quickly recovered from the crisis thanks to its fiscal response during the COVID-19 period."
At the same time, he signaled a negative view on introducing separate fiscal discipline such as a "fiscal rule." Minister Park said, "Even within the EU, nine countries set fiscal rules but cannot keep them," adding, "because of unexpected external uncertainties." He said, "Due to problems caused by rigid fiscal rules holding things back, the trend is to defer or revise and supplement them," adding, "We need to take this into comprehensive account."
On the possibility of a second supplementary budget, he said, "Our job is to maximize the effect of the supplementary budget that has already been assembled."
Meanwhile, Minister Park said the Ministry of Planning and Budget will draw up a mid- to long-term strategy such as "Vision 2045" and release it within the year. He said, "Based on the assessment of the 2006 Roh Moo-hyun administration's 'Vision 2030,' we are exploring ways to differentiate and advance the mid- to long-term strategy," adding, "It is necessary to pursue a consistent strategy that transcends progressives and conservatives and the ruling and opposition parties, even if administrations change."