Future Response Fund criticized over project selection and 106 trillion won borrowing

  • The Lee Jae Myung government’s proposed Future Response Fund was criticized for broad project selection and weak oversight.
  • Only 42% of 45 trillion Korean won across 140 reviewed projects matched the fund’s stated purpose, while 104.4 trillion won of a proposed 162.3 trillion won fund would be reserves.
  • The plan would raise national debt by 106 trillion won next year, with interest costs projected at 42.8 trillion won next year and 53.3 trillion won by 2030.

The Future Response Fund promoted by the Lee Jae Myung government is facing criticism over project selection, fiscal oversight and a plan to increase national debt by 106 trillion won next year while placing 104.4 trillion won in reserves in a proposed 162.3 trillion won fund. An analysis of 140 projects worth 45 trillion Korean won found that only 42% aligned with objectives such as capital formation and human capital investment. Current transfers, cash support and local general funds accounted for 40% of the allocation, while 61 projects worth 18.3 trillion Korean won involved transferring existing projects. At an emergency forum at the National Assembly on the 10th, experts including Kim Woo-chul, Hwang Sang-hyun and Song Heon-jae argued that strong tax revenue should support debt repayment and fiscal surpluses rather than large cash reserves. They also warned that national-debt interest costs are projected to reach 42.8 trillion won next year and 53.3 trillion won by 2030. Separately, the government submitted a National Finance Act amendment on the 3rd that would allow excess tax revenue to flow into the fund instead of prioritizing government-bond repayment.

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