New Law on Deficit Reduction Urgent

“I’ve had a difficult time finding a happy medium between two integral tasks: stablizing the livelihood of those in the low-income bracket and managing the serious financial deficit.”

Planning and Budget Minister Jin Nyum was speaking at the unveiling of the Ministry’s decision to draw up a supplementary budget bill to the tune of 2.4 trillion won ($2.1 billion). He emphasized, “Although the domestic economy is reviving and our financial problems have been alleviated to some extent, those in the low-income bracket are still suffering from financial difficulties. Besides, the impending rule change that will separate the roles of doctors and pharmacists along with losses from foot-and-mouth disease and the forest fires that wreaked havoc across Kangwon province were factors behind our decision to introduce a supplementary budget bill.”

Adding his support to the supplementary budget, a high-ranking official from the Ministry of Planning and Budget stated, “It wouldn’t make sense for the government to ignore people who are hungry for the sake of rebuilding a healthy national economy.”

No one will be opposed to the idea that the government should put every effort into reducing the disparity between the rich and the poor. The point is the fate of domestic economy. If we make use of the money which is generated by getting into debt to support people with limited means, without resolving the underlying problem, the burden will just be passed on to our successors.

Domestic debts swelled under the period of IMF management: last year, the economic deficit reached $97 billion, a big rise from the $45 billion of 1996. This means that there is debt of 2,300,000 won for every single Korean.

Once a country gets itself into debt it is very difficult to get out again. The way the United States turned around its 30-year deficit, dating back to 1969, to achieve an economic surplus is a good lesson for us.

The upbeat U.S. economy undoubtedly contributed to the financial deficit turnaround, but had it not been for the measures implemented by government and congress such as the special law ensuring the stringency of the economic system, it would have been impossible.

Our government is now known to be proceeding with its endeavour to establish a special law aimed at curtailing the deficit by putting priority on paying back debts and allowing supplementary budget bills only in desperate need. However, this plan has yet to be submitted to the National Assembly and is still uncertain. Economic experts and analysts argue that the implementation of the special regulation for deficit reduction would probabaly have enabled us to set aside a larger amount for paying back debts.

The government should place equal importance on paying off its debts to reduce the deficit as it does on helping those people on low-incomes.

by Lee Kye-young