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Finance Ministry warns campaign promises to expand welfare programs would be unsustainable
The Ministry of Strategy and Finance said on Wednesday that new campaign pledges by political parties, if implemented, would increase state spending by at least 268 trillion won ($238 billion), a burden that will likely undermine the nation’s fiscal base.
The findings by a government task force examined all 266 welfare-promotion pledges by the ruling Saenuri Party and main opposition Democratic United Party, with the general elections slated for April 11, and concluded that the estimated costs could rise further given the aging demographics and surging demand for welfare programs.
The Finance Ministry has continued to point out the problems with a flurry of “populist” campaign promises, most of which would either introduce new welfare programs or increase spending on existing ones.
“Based on the best possible calculation and excluding related outlays by regional administrations, South Korea’s welfare spending will likely go up an average of 54 trillion won every year in the cited period,” said Vice Finance Minister Kim Dong-yeon.
The latest projection of the additional costs is higher than the 220 trillion won increase tallied in February.
Kim, who led the task force investigating welfare spending proposals, said the findings revealed that both parties had fuzzy ideas about how to secure the fresh funding to back up their numerous welfare pledges.
“In the campaign pledges, many candidates came up with proposals such as public construction projects for regional communities,” Kim said, expressing his concern that such promises would eventually lead to tax hikes and issuance of more state debt.
Experts and policymakers alike remain concerned about the mounting burden placed on the state spending related to welfare programs such as health insurance, as the country is faced with a rapidly aging population.
The Korean government, meanwhile, will strengthen the welfare infrastructure by spending 92.6 trillion won for welfare programs this year, the vice minister said. The figure is up from 86.4 trillion won this year.
By Yang Sung-jin (insight@heraldcorp.com)
The Ministry of Strategy and Finance said on Wednesday that new campaign pledges by political parties, if implemented, would increase state spending by at least 268 trillion won ($238 billion), a burden that will likely undermine the nation’s fiscal base.
The findings by a government task force examined all 266 welfare-promotion pledges by the ruling Saenuri Party and main opposition Democratic United Party, with the general elections slated for April 11, and concluded that the estimated costs could rise further given the aging demographics and surging demand for welfare programs.
The Finance Ministry has continued to point out the problems with a flurry of “populist” campaign promises, most of which would either introduce new welfare programs or increase spending on existing ones.
“Based on the best possible calculation and excluding related outlays by regional administrations, South Korea’s welfare spending will likely go up an average of 54 trillion won every year in the cited period,” said Vice Finance Minister Kim Dong-yeon.
The latest projection of the additional costs is higher than the 220 trillion won increase tallied in February.
Kim, who led the task force investigating welfare spending proposals, said the findings revealed that both parties had fuzzy ideas about how to secure the fresh funding to back up their numerous welfare pledges.
“In the campaign pledges, many candidates came up with proposals such as public construction projects for regional communities,” Kim said, expressing his concern that such promises would eventually lead to tax hikes and issuance of more state debt.
Experts and policymakers alike remain concerned about the mounting burden placed on the state spending related to welfare programs such as health insurance, as the country is faced with a rapidly aging population.
The Korean government, meanwhile, will strengthen the welfare infrastructure by spending 92.6 trillion won for welfare programs this year, the vice minister said. The figure is up from 86.4 trillion won this year.
By Yang Sung-jin (insight@heraldcorp.com)
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Articles by Korea Herald
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