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| ▲ This file photo shows former Finance Minister Hong Nam-ki. (Yonhap) |
audit agency-ex-finance minister
Ex-Finance Minister Hong ordered downsizing of national debt-to-GDP forecast: state auditor
SEOUL, June 4 (Yonhap) -- Former Finance Minister Hong Nam-ki ordered his ministry in 2020 to downsize the 2060 outlook for the national debt-to-GDP ratio in a bid to avoid public criticism, the state auditor said Tuesday.
In a report on the operations of key financial management systems, the Board of Audit and Inspection (BAI) said Hong, who served under the previous administration of President Moon Jae-in, instructed the ministry to revise the ratio from three digits to two digits, resulting in the forecast being changed from 153 percent to 81.1 percent.
The national debt-to-GDP ratio is used as an indicator of the government's fiscal health, with a lower rate giving the government more leeway to increase expenditures.
According to the BAI, the finance ministry carried out a preliminary simulation in July 2020 to estimate the debt-to-GDP ratio in 2060 and got back a range of 111.6 percent to 168.2 percent.
Hong, however, reported to the presidential office the same month that the government could face criticism if the 2060 estimate jumps from the 62.4 percent forecast in 2015 to over 100 percent five years later.
The finance ministry later carried out a formal simulation and reported both the original outlook of 153 percent and a new outlook of 129.6 percent to Hong, but he ordered the ministry to revise the ratio to two digits, claiming "the people will become anxious," the BAI said.
In particular, Hong gave specific instructions to downsize the ratio by changing a key premise that calls for "linking an increase in discretionary spending to the economic growth rate," the auditor said.
The BAI accused Hong of damaging the objectivity and transparency of long-term financial outlooks, saying it deemed his actions to be a violation of the State Public Officials Act and notified the finance ministry to inform the Ministry of Personnel Management of the findings so they can be used in future personnel decisions.
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