President Lee Jae-myung on Wednesday called for aggressive fiscal policy, urging the government to focus its capabilities on laying the groundwork for a major leap in the national economy. "Please prepare the second-half economic growth strategy and next year's budget on this basis," Lee said, while cautioning that "we must not fall into the trap of populist austerity rhetoric that deceives the public."
Speaking at a Cabinet meeting held jointly with an emergency economic review session at the former presidential office, Lee said, "This is a time of crisis. In such times, saving is important, but it is rather necessary to invest in strengthening the nation's capabilities." He added that research has confirmed active and strategic fiscal management can provide a tangible engine for the people's livelihood economy. "It was confirmed that the livelihood recovery consumption coupons distributed last year boosted sales of local small merchants by an additional 430,000 won for every 1 million won in coupons issued," he explained.
Lee also pointed out that "despite such objective facts, voices in some parts of society keep forcing austerity like a round song." He continued, "They cite national debt as their justification, but this is in effect an irresponsible voice telling us to stand idle while the public suffers." Lee went on to say, "There was a time when frugality was a virtue. Now is an era when consumption is a virtue. Our society has become one where money not circulating is the problem. At such times, the government's role is to keep the economy circulating through investment."
The president said, "If we revitalize domestic demand through active fiscal policy and raise the economic growth rate and gross domestic product itself, the denominator grows larger and the national debt ratio actually falls." He added, "Particularly if potential growth and productivity are raised through this process, the tax revenue base will also expand, and the debt ratio will decline over the long term, realizing a virtuous cycle in which the economy's growth plate thickens further."
Lee concluded by clarifying his stance on expansionary fiscal policy. "This is absolutely not about spending recklessly whenever we please," he said. "Now is the time when we can grow our potential through investment. Because it is a time of crisis, isn't it a basic principle that investing now will return as greater rewards later?"
