President Park Warns of Fiscal Crisis Caused By Increased Welfare Spending

It is always tough to run against candidates that promise free stuff to the public without the responsibility that goes along with paying for it:

President Park Geun-hye warned against the dangers of populist campaign pledges Friday, stressing that maintaining fiscal soundness is a key factor that the government should take into account in setting its 2017 budget proposal.

“Laws containing populist ideas will burden not only the current generation but the next,” Park said chairing the national fiscal strategy meeting at the presidential office. She added excessive spending on welfare could have an impact on the country’s long-term fiscal health.

The chief executive also advocated special administrative rules like the “pay-go” system. The system makes clear that any additional outlays must be offset by spending cuts or revenue increases.

“The problem of maintaining long-term fiscal soundness is something that is agreed upon by the people,” the president pointed out.

At the meeting that sets government guidelines on spending, the Ministry of Strategy and Finance said it will maintain its expansionary fiscal policy mode for the next five years to prop up the economy. It, however, said every effort is going to be made to cut unnecessary outlays.

The ministry moreover has been moving to streamline the public sector to get rid of overlapping institutions. This can save money and lead to a more efficient fiscal spending structure.

The chief executive’s latest remarks apparently came after the political parties spearheaded different welfare pledges in the lead-up to the April 13 parliamentary elections.

Kim Chong-in, interim chairman of the main opposition Minjoo Party of Korea, stressed the importance of “productive welfare,” saying that the expanded welfare policy will eventually induce growth in related industries, such as health and medical services.  [Yonhap]

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