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More crises to come

Published: 21 Apr. 2020, 19:41

Disagreements between the government and ruling Democratic Party (DP) continue over emergency relief grants to help people get through the coronavirus crisis. The Moon Jae-in administration announced it would give money to the 70 percent of households with the lowest incomes, but the DP is insisting on handouts to all. That cacophony fuels confusion. The brawl over the relief grants is being intensified by the main opposition United Future Party (UFP)’s sudden change in its position of payments for all.

Amid the squabbles, the word “emergency” has lost its meaning. To effectively tackle Covid-19, speed is important. But the government is lagging far behind other countries, including the United States and Japan, in doling out money. If the Moon administration has trouble reaching an agreement on handing out the cash, it must demonstrate some flexibility by first giving the money to the lower income groups and then determining whether to offer aid to the rest of the people too. That is better than wasting time.

The economic impact of the outbreak is too immediate to wrangle over the scope of recipients. Our exports decreased 26.9 percent so far this month. A critical dearth of local demand is shaking the very foundations of our mainstay industries, as seen in the deepening liquidity crisis of Doosan Heavy Industries & Construction and SsangYong Motor.

An emergency calls for emergency relief. Yet it is a mere quick fix. As long as the government is tied up with the relief and ignores more urgent economic issues, the country will soon face a bigger crisis.

In a meeting with his aides Monday, President Moon Jae-in ordered an emergency economic team to be set up led by Deputy Prime Minister for the Economy Hong Nam-ki, who also serves as finance minister. More worrisome is a critical lack of command over the government’s fiscal policy. This is in sharp contrast with the 1997-98 Asian economic crisis and the 2007-08 global financial meltdown during which experienced and competent economic officials helped us weather the crises.

As the pandemic shock drags on, it will thrust our economy into an uncertain future. No one knows how many fiscal inputs are needed. The government needs to safeguard its fiscal solidity if it wants to leave some room for additional injections of emergency funds. If the government wants to stick with Hong, it is better to give power to the Finance Ministry. Instead of blindly trying to put its campaign promises into action, the government should be careful in addressing a tsunami of economic shocks from Covid-19.

JoongAng Ilbo, April 22, Page 30