Don’t repeat such leaks of cash handouts

A report by the Board of Audit and Inspection (BAI) on how the government spent the budget for supporting small merchants during the Covid-19 pandemic is shocking. The report released on Thursday explicitly shows what problems can occur if the government heftily implements its cash handout programs. The Moon Jae-in and Yoon Suk Yeol administrations provided financially-struggling merchants with a total of 61.4 trillion won ($44.5 billion) in relief from 2020 to 2022 — including seven times for disaster relief and four times for damage compensation. However, due to the government’s lax management of the system and poor scrutiny afterwards, a whopping 3.23 trillion won was not spent properly.

The disaster relief program was aimed to help small merchants suffering from a sharp decrease in their sales after the pandemic. But it was found that 179,000 merchants received 2.1 trillion won even when their sales increased for four years until 2022. That’s because the Ministry of SMEs and Startups didn’t check their financial conditions closely. For instance, a solar power plant didn’t sell any electricity for eight months since its opening in May 2021, but received 400,000 won citing a sales reduction in the same category and took 4 million won later even without presenting their sales numbers to the ministry. That’s not all. A total of 366,000 merchants could receive 2.68 trillion won beyond the level of their damages as the ministry offered the money as long as their damage was affirmed.

Given the unprecedented impact from the pandemic on businesses across the country, the government could have made such mistakes while swiftly pushing for the disaster relief. The government also had to release sufficient liquidity into the market to help rescue the economy. That’s why the BAI only advised the Ministry of SMEs and Startups to be careful about such programs next time rather than immediately holding related officials accountable for the misuse of the money.

Nevertheless, the government must learn lessons from the careless implementation of the cash handout programs. It has become a new norm since the liberal Moon administration launched aggressive cash handouts during the pandemic. The conservative government was no different.

But clearly, such a quick fix can’t solve our economic problems in a fundamental way due to the exacerbation of fiscal deficit and inflation, not to mention the deceitful acceptance of the money. The government must create a manual to ensure efficiency and fairness in implementing its cash handout policy next time.