Im Lee-ja, the Policy Committee Chair of the People Power Party, sharply criticized the government's budget proposal and the Future Response Fund during a National Assembly meeting on September 18.
Im urged for careful and precise fiscal management in light of the U.S. Federal Reserve's interest rate hike on September 16.
"The Fed has raised interest rates for the first time in three years and two months. The global economy is entering a high-interest tightening phase again," he said, noting that rising rates increase household interest burdens and corporate financing costs.
He pointed out, "However, the financial management of the Lee Jae-myung administration is regressive. On one hand, they are tightening the money supply to control inflation, while on the other, they are implementing an expansionary fiscal policy amounting to 821 trillion won."
Im also took issue with the Future Response Fund reflected in next year's budget. He argued that it is contradictory for the government to issue over 100 trillion won in deficit bonds while accumulating 104.4 trillion won of the 162.3 trillion won Future Response Fund as surplus funds.
He described it as a "bizarre financial management plan that borrows money to hoard it." Furthermore, he noted that the target return on the accumulated funds is about 0.57 percentage points lower than the borrowing rate, resulting in an annual loss of 568 billion won based on a 100 trillion won benchmark.
According to Im, the government aims to manage borrowed funds at an interest rate of 4.41% while targeting a return of around 3.85%. Even if the target return is achieved, it would still incur a daily loss of 1.55 billion won.
He urged the government to "immediately reduce bond issuance" and suggested that if there are essential projects in areas like youth, artificial intelligence (AI), and local development, they should be reflected in the budget review process as needed.
Im urged for careful and precise fiscal management in light of the U.S. Federal Reserve's interest rate hike on September 16.
"The Fed has raised interest rates for the first time in three years and two months. The global economy is entering a high-interest tightening phase again," he said, noting that rising rates increase household interest burdens and corporate financing costs.
He pointed out, "However, the financial management of the Lee Jae-myung administration is regressive. On one hand, they are tightening the money supply to control inflation, while on the other, they are implementing an expansionary fiscal policy amounting to 821 trillion won."
Im also took issue with the Future Response Fund reflected in next year's budget. He argued that it is contradictory for the government to issue over 100 trillion won in deficit bonds while accumulating 104.4 trillion won of the 162.3 trillion won Future Response Fund as surplus funds.
He described it as a "bizarre financial management plan that borrows money to hoard it." Furthermore, he noted that the target return on the accumulated funds is about 0.57 percentage points lower than the borrowing rate, resulting in an annual loss of 568 billion won based on a 100 trillion won benchmark.
According to Im, the government aims to manage borrowed funds at an interest rate of 4.41% while targeting a return of around 3.85%. Even if the target return is achieved, it would still incur a daily loss of 1.55 billion won.
He urged the government to "immediately reduce bond issuance" and suggested that if there are essential projects in areas like youth, artificial intelligence (AI), and local development, they should be reflected in the budget review process as needed.
* This article has been translated by AI.
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