Emergency forum held at National Assembly

None of fund's 140 projects subject to performance review

Park: 'Excess tax revenue should pay off national debt first'

Experts warn of weak Assembly oversight, fiscal sustainability risks

Rep. Park Soo-young of the People Power Party [Courtesy of the lawmaker's office]
Rep. Park Soo-young of the People Power Party [Courtesy of the lawmaker's office]

The government's push to create a 162 trillion won ($121 billion) Future Response Fund next year drew sharp criticism from the People Power Party and fiscal experts. They called it "a structure that increases national debt to build up more than 100 trillion won in idle reserves."

Critics also pointed out that not a single one of the fund's 140 detailed projects is subject to performance management.

Rep. Park Soo-young of the People Power Party held a forum titled "Future Response Fund? Future Mortgage Fund: Emergency Diagnostic Forum on the 162 Trillion Won Political Slush Fund" at the National Assembly members' office building on Thursday. Kim Woo-cheol, president of the Korea Public Finance Association; Song Heon-jae, professor at the University of Seoul; and Hwang Sang-hyun, professor at Sangmyung University, took part in the discussion. They repeatedly raised similar concerns.

Under the government's 2027 budget plan, tax revenue is projected to rise by 194.2 trillion won from this year to reach 584.4 trillion won. The managed fiscal balance deficit is expected to shrink to 3.1 trillion won, while national debt will grow by 106 trillion won. Of the fund's 162.3 trillion won, 104.4 trillion won will be set aside as idle reserves, including deposits with financial institutions.

Kim said, "If you look at the government as a whole on a single balance sheet, the reason debt grows by 106 trillion won in a year with almost no deficit is the reserves being built up in the Future Response Fund." He added, "It is a policy error in this budget bill that debt keeps rising even amid a favorable fiscal environment with sharply increasing tax revenue."

Park likewise criticized the fund as "an incomprehensible shell game of borrowing money just to deposit it in an account." "With little gap between the interest rate and the target rate of return, there is almost no net gain to expect, and it may only add to the interest burden," he said. He went on to say, "For the sake of future generations, temporary excess tax revenue should, by law, go first toward paying down national debt."

Questions were also raised over whether the fund's projects actually serve their stated purpose of "responding to the future." According to analysis by Park and Kim, of the fund's 45.4 trillion won in project spending, only about 42 percent was classified as capital formation or human capital investment. Some 61 projects, worth roughly 18.3 trillion won, were found to be existing projects simply relocated into the fund.

Meanwhile, the Ministry of Planning and Budget's 2027 performance plan classified all 140 detailed projects under the Future Response Fund as "not subject to performance management." In most cases, the ministry cited the projects as "projects carried out by other ministries." Park said, "If projects are simply pushed off as another ministry's responsibility and performance is not properly managed, there is no reason to classify them separately under the Future Response Fund and allocate budget to them."

Song questioned the sustainability of the funding approach. "The government needs to answer whether shifting the priority of tax revenue earned during a boom period — from debt repayment to building up new reserves — is truly a choice made for the sake of future generations," he said.

Concerns were also raised that the fund could weaken the National Assembly's control over the budget. Hwang said the Future Response Fund carries considerable risk in terms of fiscal democracy, local governments' fiscal autonomy and macro-financial soundness. He argued that stronger prior oversight by the Assembly and a reduction in the scale of idle reserves are needed.

Park said, "There is no shortage of projects — cash-type support, transfers of existing budget items, support for financial markets and public enterprises — that do not need to be organized under the Future Response Fund at all." He added, "Through the Assembly's deliberation process, I will thoroughly examine whether the fund's projects are appropriate and whether taxpayers' money is being properly controlled."


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