Don’t change course on fiscal integrity

President Yoon Suk Yeol promised to maintain fiscal integrity in a “responsible and sustainable” manner during a strategy meeting Wednesday. The meeting sets the direction for the government’s future fiscal operation, including next year’s budget and five-year plan.

The first strategy meeting under the Yoon administration held in July last year officially shifted away from the expansionary policy during the previous five years of the Moon Jae-in administration to restore fiscal health. It set the guideline on managing fiscal deficit that ballooned during the Covid-19 period to pre-pandemic level of around 3 percent of the GDP.

President Yoon re-emphasized fiscal integrity. “No political force would wish to pursue fiscal tightening which is not popular,” he said. But tighter budget management is unavoidable if “the nation and people” come before political ambition, he added.

Those who call for a debt-financed fiscal increase is “addicted to fiscal spending,” he said, indirectly criticizing the Democratic Party (DP) pitching for a 35-trillion-won ($27-billion) supplementary budget. Such a move is “exploiting the future generation,” Yoon said. “As King Solomon declared who was the true mother, the people will discover that a government that works to ensure sound fiscal health instead of chasing immediate political gains is the one who really cares for the people.”

The legislature must hasten the review of the bill on fiscal guidelines stuck in a subcommittee of the Strategy and Finance Committee. Since exceptions are laid out for the urgent need of fiscal increase, the DP must stop dilly-dallying on the discussion.

While ensuring integrity in public finance, the president promised that his administration will spend money to protect the weaker parties and foster future growth engines. Budget must be watched to be spent on what is necessary. The economic policy direction for the second half to be announced next week will be aimed to vitalize the economy, stabilize people’s livelihood, enhance fundamentals, and prepare for the future. To prop up the economy without budget increases, exports as well as corporate investment and domestic demand must increase. Prices must stabilize to revive the public economy. To improve economic fundamentals, reforms in labor, education and pension must make progress.

Trade deficit has been narrowing on eased inflation, but uncertainties remain. Businesses should be encouraged to invest to help bolster the economy without increasing the budget. The government must examine whether tax and antitrust probes to serve certain policy goals are in excess. The government must borrow Solomon’s wisdom to meet the president’s vow to sustain fiscal integrity while supporting the economy.