Yi Whan-woo is a Korea Times journalist primarily covering finance. He writes in-depth articles on macroeconomy and financial markets and previously covered sports, politics, diplomacy and inter-Korean affairs, among others. Feel free to contact him at yistory@koreatimes.co.kr.
Populist pledges fuel concerns over already-snowballing gov't debt
Lee Jae-myung, right, the presidential candidate of the ruling Democratic Party of Korea (DPK), and his rival Yoon Suk-yeol, of the main opposition People Power Party (PPP), attend a meeting hosted by small businesses on Yeouido in Seoul, Tuesday. Yonhap
By Yi Whan-woo
By Yi Whan-woo
The presidential candidates are pledging to give more cash handouts to people affected by the pandemic, fueling concerns that the country's debt may exceed the 1,060 trillion won ($893.8 billion) estimated for this year.
The amount of national debt projected by the Ministry of Economy and Finance is record-high, with the government planning to draw up a supplementary budget worth 14 trillion won to support small businesses hit by the social distancing measures required to control the spread of COVID-19 infections.
The two candidates ― Lee Jae-myung of the ruling Democratic Party of Korea (DPK) and Yoon Suk-yeol of the main opposition People Power Party (PPP) ― both view the 14 trillion won as falling short of meeting their campaign promises.
“The supplementary budget is not good enough,” Lee said during a recent campaign event, referring to his universal basic income package aimed at offering all citizens annual cash subsidies of at least 250,000 won from 2023.
Yoon calls for spending at least 50 trillion won on a pandemic relief package, in addition to raising enlisted soldiers' monthly salary to 2 million won.
Sources familiar with the matter argued that the candidates are coming up with populist promises and that the country's financial soundness will worsen no matter which candidate is elected.
“It is worrisome that the two candidates are being too reckless in their pledges, even if the election is approaching fast and they need to buy votes,” a professor in Kookmin University's Department of Public Administration said. “They should have conducted a thorough analysis to decide which parts of society require government support, and that does not seem to be the case.”
The Moon Jae-in government so far drew up nine supplementary budgets, six of them related to the COVID-19 pandemic crisis.
The national debt per capita is likely to surpass 20 million won this year, taking into account the 10 trillion won in government bonds that will need to be issued to finance part of this year's first supplementary budget, if it wins approval.