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Video Description

Type: KIHASA Policy Featurette

Topic: Government Budget: Should We Be Afraid Of Debt?

Guest Speaker: Woo Seok-jin, Professor of Economics, Myongji University

Transcript

The idea that revenues and expenditures need to be balanced is a 1990s mindset. It reflects the old approach to budgeting that prevailed in the 1980s and 1990s, where the idea was 'decide your spending based on what you expect to receive.' This is an outdated method of fiscal management that was largely discredited after the IMF crisis. Does this mean that taking on debt is always the answer? Not necessarily, but the point is that you shouldn't be afraid of debt, depending on the situation. That is the basic attitude of modern fiscal management. But our government is still being very frugal this year, and what does it mean? It means that the government's contribution to the growth of our country is negative. It’s not something that happens very often, but the government is currently dragging down the real economic growth rate, which in turn leads to lower tax revenues and even less money for the government to spend... it's a vicious cycle.