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ED Continuing budget expansion

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Spending increase should respond to emergency, stimulate growth

Last Friday, the National Assembly passed the 2022 budget of 607.7 trillion won ($516.3 billion). The government's outlays have increased by more than 200 trillion from 400.7 trillion won in 2017. The mega-budget for next year is attributed to the continuous growth of spending on expanded welfare programs under the Moon Jae-in administration and the sharp increase in fiscal need for disaster relief funding to cope with the COVID-19 pandemic.

Taxpayers are feeling uneasy, as despite heavy welfare spending over the last four years, the public's livelihood has improved little, and the country's economic outlook is not so bright either. An increasing number of people suspect their taxes are being poured into a bottomless pit. The national debt has snowballed as the government expanded its spending based on excess revenue resulting from heavier taxation, including property taxes. However, there are few signs that the spending spree is leading to a better economy.

Above all, prices keep rising amid disrupted global supply chains ― consumer prices climbed 3.7 percent last month, the highest in a decade. On the other hand, private spending and business investment fell, raising the possibility of stagflation. Considering the gloomy economic environment, the 2022 budget should be used to respond to economic emergencies and stimulate growth.

Whoever becomes the next president should implement drastic restructuring measures in executing the budget, as the current spending plan comprises many pork-barrel projects in the lead-up to the March 9 presidential election and June 1 local polls. A supplementary budget may be needed if compensation for small businesses expands due to the new Omicron variant of COVID-19. Unfortunately, it is questionable whether the economy will be able to afford this.

As the government has increased its spending by 8-9 percent a year, the national debt will have increased from 600 trillion won in 2017 to 1,070 trillion won next year, pushing its ratio to GDP to above 50 percent. All this explains why the government must increase spending efficiency in executing the budget and provide maximum support for job creation and corporate innovation. Only then can the nation revive its sputtering growth engine.