Democratic Party‘s fiscal policy raises concerns

Lee Jae-myung, leader of the main opposition Democratic Party, speaks at the party’s senior member meeting at the National Assembly in a photo sourced from Yonhap

The Democratic Party of Korea’s recent legislative maneuvers in the National Assembly have raised eyebrows, particularly as the International Monetary Fund (IMF) takes a cautionary stance on South Korea‘s escalating national debt.

Despite the IMF’s warnings about the rapid growth of the country’s state debt, the opposition party is recklessly moving forward with its campaign promises, including a contentious bill requiring the government to purchase surplus rice. The legislation requires the government to buy excess rice if production outweighs demand by three to five percent or if prices fall by five to eight percent or more compared with those from the previous year.

The opposition party, which holds a majority of the seats in the National Assembly, unilaterally passed the bill on Thursday to vote for it in a plenary session, even as members from the ruling People Power Party (PPP) were absent. Although President Yoon Suk Yeol vetoed the bill in 2023, the opposition-controlled National Assembly recently brought it up again.

Critics have argued that the populist bill will worsen rice overproduction and cause prices to fall further, putting further upward pressure on government debt.

In a paper published Wednesday, the IMF said that Korea‘s general government liability-to-GDP ratio could hit 60 percent by 2029, indicating a potentially unsustainable fiscal trajectory. While the Democratic Party of Korea advocates for measures such as cash handouts in addition to the rice bill, questions remain about the feasibility of financing such initiatives.

The opposition party has failed to recognize long-term repercussions of its legislative dominance by ignoring the potential consequences of increased national debt. More pressure on government spending because of populist fiscal measures could have adverse effects on future generation taxpayers, and the country needs a balanced approach that considers both short-term goals and long-term fiscal sustainability.