Policymakers must act decisively to ensure long-term fiscal health
Indicators gauging the flow of the fiscal balance are going from bad to worse, raising doubts about the country's long-term fiscal health. Against this backdrop, the government is drawing attention by unveiling a package of measures aimed at uprooting the illegal acceptance of state subsidies.
According to the Ministry of Economy and Finance, Korea's consolidated fiscal balance posted a 22.3 trillion won ($18.7 billion) deficit in the first eight months of the year. The deficit was the largest since the government began compiling relevant statistics in 2000. This was the consequence of swelling fiscal expenditure at a time when a tax revenue boom, which had been recurring over the last four years, came to an end.
Korea has suffered deficits in its consolidated fiscal balance a few times since 2000, but this is the largest January-August deficit to date. Korea's so-called management budget balance, which excludes four major national funds such as the pension from the consolidated fiscal balance, also posted a 49.5 trillion won deficit in the eight months.
The government's package to stem the illegal practice of preying on taxpayer money, among other things, calls for removing the ceiling on monetary rewards people can receive for reporting undue acceptance of state subsidies. And 30 percent of the money the government retrieves from illegitimate subsidy recipients will be given to those who report them. The government retrieved 64.7 billion won from people who illegally received state subsidies from January through July. Efforts to prevent taxpayer money from being compromised are only natural, given the dire prospects for our fiscal balance arising from the country's super-low birthrate and aging population.
Korea's ratio of national debt to GDP is still low by international standards, but there is no room for complacency. It is urgent for policymakers to come up with more stringent measures that will put the brakes on our swelling fiscal deficit.
Indicators gauging the flow of the fiscal balance are going from bad to worse, raising doubts about the country's long-term fiscal health. Against this backdrop, the government is drawing attention by unveiling a package of measures aimed at uprooting the illegal acceptance of state subsidies.
According to the Ministry of Economy and Finance, Korea's consolidated fiscal balance posted a 22.3 trillion won ($18.7 billion) deficit in the first eight months of the year. The deficit was the largest since the government began compiling relevant statistics in 2000. This was the consequence of swelling fiscal expenditure at a time when a tax revenue boom, which had been recurring over the last four years, came to an end.
Korea has suffered deficits in its consolidated fiscal balance a few times since 2000, but this is the largest January-August deficit to date. Korea's so-called management budget balance, which excludes four major national funds such as the pension from the consolidated fiscal balance, also posted a 49.5 trillion won deficit in the eight months.
The government's package to stem the illegal practice of preying on taxpayer money, among other things, calls for removing the ceiling on monetary rewards people can receive for reporting undue acceptance of state subsidies. And 30 percent of the money the government retrieves from illegitimate subsidy recipients will be given to those who report them. The government retrieved 64.7 billion won from people who illegally received state subsidies from January through July. Efforts to prevent taxpayer money from being compromised are only natural, given the dire prospects for our fiscal balance arising from the country's super-low birthrate and aging population.
Korea's ratio of national debt to GDP is still low by international standards, but there is no room for complacency. It is urgent for policymakers to come up with more stringent measures that will put the brakes on our swelling fiscal deficit.
