To win more votes?The government is dishing out budgetary spending ahead of the April 15 parliamentary election. Deputy Prime Minister for the Economy Hong Nam-ki said the government will spend a maximum of 62 percent of this year’s supersized budget of 512.3 trillion won ($429 billion) in the first half, with 37 percent doled out in the first quarter to create jobs. Advanced fiscal spending can help the economy and aggressive public spending in the early part of the year can stimulate the private sector. However, it remains skeptical if the spending plan has such an innocent design.
The massive expenditure scheme is concentrated in the first quarter ahead of the April election. Heedless spending could leave little for the second-half of the year.
Cash handouts are another worry. The government is offering to give away 1 trillion won to make temporary jobs for seniors during the wintertime and 90 trillion won to assist small merchants around the Lunar New Year’s holiday later this month. It will expedite the payment of 120 billion won child care allowances ahead of New Year’s holiday. It will also administer 81 percent of this year’s budget on public safety within the first quarter. Lee Hae-chan, chairman of the ruling Democratic Party, emphasized “speed” in budgetary spending during the first party-government meeting this year. It has only raised suspicions that tax funds are used to aid the ruling party’s win in the general election.
Whether the money will be wisely spent is also uncertain. The government has shortened its feasibility study on state infrastructure projects that take more than 10 months normally to seven months. Under the law, any public project costing more than 50 billion won requires a preliminary study on its feasibility. But the government has been exempting such studies.
At times of downturn, the role of fiscal expansion is necessary. But tax funds should be spent efficiently. This year’s budgetary plan had been rubber-stamped, with much spending with populist design. Of 512 trillion won in 2020 budget, 180 trillion won has been earmarked for social welfare. Over 25 trillion won was appropriated to create jobs — but mostly in producing temporary hires for senior citizens. Due to reduced tax revenue, the government must issue national bonds worth 60 trillion won this year. If they are aimed to buy votes with money, the country’s fiscal health is in a serious jeopardy.
JoongAng Ilbo, Jan. 10, Page 30