Then-Deputy Prime Minister and Minister of Finance and Economy Koo Yun-cheol, left, arrives at Incheon International Airport on Aug. 30 to depart for the United States to attend a meeting of G20 finance ministers and central bank governors. Upon arriving at the airport, Koo learned that he was among the officials slated for replacement in a Cabinet reshuffle. He initially canceled his trip but later decided to proceed with his scheduled departure.MINISTRY OF FINANCE AND ECONOMY/YONHAP
Suh Kyoung-ho
The author is an editorial writer at the JoongAng Ilbo.
“The Ministry of Finance and Economy is being sidelined. It requested 10 revisions — three to the National Finance Act and seven to the Future Response Fund Act — but not a single word was reflected. The ruling party and government held two consultations and reached conclusions with only the budget minister present, excluding the finance minister.”
People Power Party lawmaker Park Soo-young made these remarks during a National Assembly audit on Friday. A day earlier, he had raised similar allegations concerning the proposed Future Response Fund.
Documents submitted by the Finance Ministry to the Ministry of Planning and Budget on Aug. 27 support his account of the rejected proposals.
The Finance Ministry requested a provision allowing 104.4 trillion won ($78.9 billion) in surplus resources from the proposed 162.3 trillion won fund to be transferred to the general account for government debt repayment. It also sought the deletion of seven provisions, including one allowing surplus funds to be deposited in other accounts and funds, arguing that these duplicated existing public fund management functions.
None of the proposals survived. Both bills submitted to the National Assembly in September retained the Budget Ministry's original wording.
It is troubling that a ministry headed by a four-term ruling party lawmaker disregarded the objections of the Finance Ministry, headed by the deputy prime minister for economic affairs.
On Aug. 30, just three days after the Finance Ministry submitted its objections, then Deputy Prime Minister Koo Yun-cheol was abruptly informed of his dismissal at the airport before an overseas trip. Two days later, the Cabinet approved the fund legislation as proposed by the Budget Ministry.
At the time, the administration's announcement of the economic chief's dismissal without advance notice seemed remarkably inconsiderate. Now, further questions arise.
Park asked whether President Lee Jae Myung had removed a deputy prime minister opposed to the fund to turn public finances into a discretionary spending account.
Concerns were not confined to official ministry documents. On Aug. 28, a junior Finance Ministry official posted an anonymous message on the ministry's internal bulletin board titled “Speak up for genuine preparation for the future.”
The official argued that the fund, despite its stated purpose, disregarded basic fiscal principles and shifted burdens onto future generations.
Real preparation, the official wrote, meant repaying government debt and stabilizing the uncertain pension system. A fund conceived primarily around finding ways to spend money was not a future response fund but a fund for destroying the future.
The criticism deserves serious consideration.
The government says the fund will serve as a strategic investment platform to boost potential growth by concentrating resources on four areas: young people, growth engines, regional development and education and talent.
But finding government spending that falls outside these broad categories would be difficult. Inevitably, the proposed fund's budget includes projects that could be financed through ordinary appropriations.
The government must distinguish investments genuinely preparing Korea for the future from routine expenditure. Otherwise, the fund risks becoming a convenient means of plugging persistent budget gaps.
If it is intended to provide fiscal stabilization when resources are insufficient, preventing wasteful spending must come first.
More troubling is the government's apparent disregard for fiscal caution. Economic ministers once considered themselves guardians of the public purse and occasionally challenged political demands for spending. Even previous Democratic administrations, despite favoring expansionary policies, heard warnings from officials.
Former Deputy Prime Minister Hong Nam-ki famously cautioned that public finances were not an inexhaustible resource. Today, such warnings seem increasingly unwelcome. President Lee has mocked advocates of fiscal conservatism as people who constantly sing the praises of austerity.
The Economist recently devoted its cover story to mounting fiscal crises and instability in global bond markets. Korea cannot afford complacency simply because the semiconductor boom has temporarily improved its fiscal position.
When government bond yields rise, economic growth must exceed borrowing costs to reassure markets. Achieving that through debt-financed investment is difficult. Whether strategic investments succeed may become clear only under the next administration or even its successor.
The young Finance Ministry official's warning deserves attention. A fund focused primarily on spending rather than preparing for future challenges risks undermining the very future it claims to protect.
If the Future Response Fund becomes little more than a vehicle for distributing cash under the banner of long-term investment, Korea's fiscal future will be in jeopardy.
This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
