Roll up your sleevesThe novel coronavirus has forced the Korean economy to a halt. The repercussions are even stronger than during the 1997-98 foreign exchange crisis and the 2007-08 global financial meltdown, as clearly seen in our companies’ struggles to stay afloat by laying off employees and slashing their paychecks. Macroeconomic indicators also are falling one after another. Experts even lowered our growth rate this year to the zero percent range.
Such alarming developments point to the need to draw up a super-sized supplementary budget in excess of 12 trillion won ($10 billion). That rings another alarm bell over a worsening fiscal condition. If the Moon Jae-in administration had refrained from devising hefty welfare plans, it could have saved some room for a sufficient extra budget. But it kept saying, “If you stack up tax money at state coffers, it gets rotten.”
But the current grim reality does not afford such a blame game. As our economic players are already in crisis, the government must pass a supplementary budget bill as quickly as possible and ensure it is spent effectively. Spending money on building infrastructure is not a good idea to counter the far-reaching impact from the virus outbreak. The government must first use the money to help the underprivileged.
Reinforcing quarantines is also urgent. Despite the need to expand investments in the public health sector after the Middle East respiratory syndrome (MERS) outbreak in 2015, no substantial improvement has been made since. A lack of medical facilities and staff only helped the new coronavirus spread faster than ever.
During the crisis from the MERS outbreak, the conservative Lee Myung-bak administration inserted a plethora of pork-barrel projects to its supplementary budget at the request of ministries across the board. The liberal Moon administration must not repeat such malpractice. The National Assembly must quickly pass the budget after a thorough screening of the details.
A public health crisis is dangerously expanding to the economic sector. During the global financial crisis, President Lee rolled up his sleeves to tackle it in a war room at the Blue House. President Moon does not do that. With a heightened alert, he must orchestrate national strategies to rejuvenate the economy — and make it more immune to unexpected factors from outside.
The government must look back on its past ill-conceived policies perfectly exemplified by income-led growth. Despite the bigger role of government spending in confronting economic challenges than in the past, tax revenues will certainly shrink. Another crisis will return. The Moon administration should be thoroughly prepared before it is too late.
JoongAng Ilbo, March 3, Page 30