Park rolls out plan to keep nation’s debt in balance

President Park Geun-hye yesterday vowed to restore the fiscal balance during her presidency, setting goals to maintain the government debt at the current amount and reform the pension system.

Park yesterday hosted the national fiscal strategy meeting at the Blue House with her entire cabinet to review her predecessor’s financial management and set forth the fiscal target for the next five years of her government. The newly elected chief policy maker of the ruling Saenuri Party also joined the session.

In this first fiscal strategy conference, the larger framework and direction of the Park administration’s financial management plan were to be discussed, the Ministry of Strategy and Finance said in a press release.

Different from the annual meetings in the past, yesterday’s conference aimed at not only discussing the mid-term fiscal target but also the plan to make investments and raise resources to implement Park’s presidential pledges such as free medical care for four major diseases and basic pension allowances for senior citizens.

“In the past, a president often makes promises during campaigns but carries out projects separately after his term starts,” Park said yesterday. “But my government will implement the promises at all cost through strong financial support.”

Park’s presidential pledges are expected to cost about 135 trillion won ($120.7 billion), and her transition team presented a plan to raise 53 trillion won by increasing tax revenue and another 82 trillion won through restructuring of expenditures. Yesterday’s meeting was intended to create the specific blueprints for the plan.

In her opening remarks, Park talked about fiscal balance, pointing out that the long-term situation is not favorable when taking into account the aging society and cost of unification.

“The government will first restore balanced finances during my term,” she said. “We will manage government debt at the mid-30 percent level and carry out pension reform in line with a more precise long-term fiscal target.”

As of the end of last year, the government debt was recorded at 445.2 trillion won, or 34.8 percent of the gross domestic product. The ratio is expected to grow to 36.2 percent by the end of this year, and Park aims to keep it at that level.

Kim Haing, Park’s spokeswoman, said yesterday that the strategy meeting shows the government’s commitment to follow through with her pledges without shifting the burden to the future generation.

According to Kim, Park issued specific requests to her ministers on their efforts to reform government finance.

“Raising the budget to implement the pledges early in my term such as in 2014 and 2015 is desirable because it can demonstrate our commitment to the people,” Park was quoted as saying by Kim. “But it is necessary to take economic conditions into account.”

She particularly showed concerns that a dramatic cut in infrastructure investments could worsen economic sentiment because the situation will continue to be tough this year and next year.

Park also said it is crucial for the government to win the public consensus on expenditure restructuring and taxation reform because complaints are destined to rise.

She urged the ministers to publicize problems associated with the system after conducting objective, in-depth evaluations by experts and require the process for major projects in the future.

Park also stressed that major projects promised for regions outside Seoul must be implemented fully and quickly because regional economies are facing more serious hardship, urging the Finance Ministry to take necessary steps.

Regarding the controversy surrounding her plan to cut the defense budget, Park said it is necessary to carry out bold reforms. Due to the escalating war threats by North Korea, concerns rose as her plan to slash the defense budget was revealed to fund welfare pledges.

“The government asked every year for a defense budget with an increase rate higher than that of the government budget,” Park said. “But the National Assembly often made large cuts. It is necessary to have reinforced feasibility studies in advance for major arms purchases and to oversee the ongoing projects thoroughly.”

She also urged the military to make bold moves to outsource noncombat procurement programs such as meal services to competitive civilian contractors.

By Ser Myo-ja [myoja@joongang.co.kr]