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Yoon highlights 'intensive' spending cut in public sector Updated: 2022-07-08 08:01:17 KST

Years of spending to fight the pandemic and prop up the economy have weakened the government's fiscal health.
The Yoon administration is looking to adopt some belt-tightening measures, likely making a huge shift from the previous government.
Yoon Jungmin outlines what to expect.

The government needs to tighten its belt first as it should lead by example.
Key message from President Yoon Suk-yeol Thursday at his first financial strategy meeting as his administration faces a national debt soaring at an alarming pace.


"There needs to be intensive restructuring on spending to ensure taxpayers' money is not wasted. Money should be spent on where it really needs to be spent."


As the president raised alarm on the nation's fiscal health saying state coffers have dramatically deteriorated in the last five years, the new Yoon administration unveiled a five-year plan to manage state finances a policy shift from years of expansionary fiscal policy.

Various Covid-19 economic stimulus such as cash handouts had led South Korea's debt-to-GDP ratio to increase to 50-percent this year from 36-percent in 2017.

According to the new plan, the government will normalize Covid 19-related spendings, sell off unnecessary assets held by public enterprises, and more strictly manage its employment quota and salary.


"We need to tighten our belts in the public sector so that more money can be saved and directed towards marginalized people, to help them weather the economic crisis."


He also called on the need to watch out for possible adverse effects of government finances on the markets, meaning higher interest rates may undermine private investments.

For the very first time, the national finance strategy meeting took place at a local university in central South Korea not at a government complex and invited business leaders from various fields such as the chief producer of SM Entertainment and young college students.

Yoon Jung-min, Arirang News.
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