SEJONG, Sept. 21 (Yonhap) — South Korea plans to unveil rules to ensure fiscal soundness, Finance Minister Hong Nam-ki said Monday.
The rules, which aim to keep the growth rate of government spending at a level of nominal growth of gross domestic product (GDP), will be announced by the end of this month, Hong told lawmakers.
However, such rules will be exempted in time of a crisis, like the coronavirus pandemic, Hong said.
The move comes amid concerns that this year’s four extra budgets could strain fiscal health.
Earlier this month, the government drew up a fourth extra budget worth 7.8 trillion won (US$6.6 billion), aimed at helping small merchants and self-employed people cushion the economic impact of a recent resurgence of the new coronavirus.
It marked the first time in 59 years for the South Korean government to allocate four extra budgets in a single fiscal year.
Four extra budgets are expected to take the nation’s debt-to-GDP ratio to 43.9 percent this year, compared with just below 40 percent before the pandemic.
Pounded by the coronavirus outbreak, the nation’s economy has plunged into a recession as its gross domestic product shrank 3.3 percent in the second quarter after a 1.3 percent on-quarter retreat three months earlier.’