Shoveling sand against the tideA supplementary budget, when used wisely, can aid the economy. But it can burden public finances at the same time. That is why the law specifies guidelines for drawing up an extraordinary budget. Under the Public Finance Act, a funding scheme beyond the regular annual financial statement can be created under “extraordinary” conditions arising from external and domestic factors such as a war or major natural disaster, economic slump or changes in inter-Korean relationship.
The government’s proposed 6.7 trillion won ($5.6 billion) in additional funding in April in theory can be justified in legal terms. But the purpose of the new funding scheme is quite perplexing. The government argued it needed the extra funding to solve fine dust pollution and aid the economy. But the funding strangely does not fit into its claim that the economy is doing fine. Yet it allocated 4.5 trillion won to aid the livelihoods of citizens and 2.2 trillion won to improve public safety and fine dust pollution.
More specifically, of the new funds, 7.6 billion won was appropriated to increase the use of Zero Pay, a consumer-to-business payment system backed by the government, 6.3 billion won to build public sports centers and 2.5 billion won to subsidize ticket fees to cinemas, museums and galleries. How they are relevant to the urgent need to revive the economy remains to be seen. The financing outline also proposes recruiting 1,000 fine dust pollution inspectors with 9.6 billion won. The idea is as makeshift as its last proposal to recruit people to turn off lights in university classrooms to create more jobs.
Worse, the government refuses to admit that it had made any policy mistakes. It wants to push ahead with income-led growth and pro-labor policies with lesser will to lift regulations and groom new growth engines. The funding through 3.6 trillion won in issuance of government bonds may as well go down the drain with little help to the economy.
The government is pitching for the supplementary budget by raising alarms about the prolonged stagnation of the economy. The senior party-government meeting on Monday raised the urgency of extra spending and blamed the opposition for delaying the plan. But the government and ruling party’s sudden emphasis on the downsides and the ridiculous budgetary appropriation raise public concerns about their economic awareness and maneuvering. The government must explain why it has not recognized the slackening economy before and why it needs extra budgeting to support Zero Pay at this stage.
JoongAng Ilbo, June 11, Page 30