District moves to head off late-payment interest and unnecessary budget waste, while stopping short of accepting full liability
Incheon's Yeongjong-gu district has decided to repay in full an 18.1 billion won ($13.5 million) short-term loan that originated from the former Jung-gu.
The district said the decision was made in the broader public interest to prevent additional fiscal waste from late-payment interest and to ease the burden on residents.
Yeongjong-gu announced Monday that it had decided to repay the short-term loan — originally issued by the former Jung-gu — after consulting with Incheon city.
The decision came after the city confirmed that both Yeongjong-gu and Jeomulpo-gu are liable for assuming the debt, and after Yeongjong-gu accepted the city's request to move quickly toward designating how the debt should be divided between the two districts.
Trusting the city's promise to promptly finalize the debt-assumption designation, the district chose to repay the loan ahead of schedule — even under tight fiscal conditions — to avoid unnecessary expenditure before the process is complete.
However, the district made clear that the early repayment does not constitute full acceptance of responsibility for the entire loan.
Once Incheon city completes its objective review and determines Jeomulpo-gu's share of the debt, Yeongjong-gu plans to formally bill Jeomulpo-gu for the corresponding portion of the amount already repaid.
On the question of how to divide the debt, the district said it will fully abide by the findings of a credible third-party verification commissioned by the city.
A breakdown of how the loan — issued to cover statutory expenses — was spent shows that expenditures in the original city center and in the Yeongjong area can be distinguished, making it appropriate for Jeomulpo-gu to assume the share of the debt spent in its territory.
A legal interpretation by the Ministry of Interior and Safety also stipulates that when a local government is dissolved or merged, the successor municipality should be designated by comprehensively reviewing the circumstances under which the debt arose and who benefited from it. The city's designation is expected to clarify each district's share of the liability in the near future.
The district also welcomed remarks made by Jeomulpo-gu in a press release Tuesday, in which the neighboring district said it would seek a resolution based on objective facts and legal review.
"Now that Jeomulpo-gu has moved away from unilateral non-response and expressed its willingness to resolve the matter through objective verification, it must engage sincerely in the city's debt-assumption designation process and the review of expenditure records," a Yeongjong-gu official said. "We hope it will humbly accept whatever final findings emerge from the verification, in keeping with the spirit of mutual development that motivated the administrative restructuring."
gilbert@heraldcorp.com
