It is said that local governments are in trouble as they have to raise financial resources for the second payment of consumption coupons to restore people’s livelihood. The Ministry of the Interior and Safety said, “It is okay to use the disaster fund as a financial resource,” but the Board of Audit and Inspection said in the past, “It could be problematic if the disaster fund is used for other purposes.” There are also concerns that if the disaster fund is used as a resource for consumption coupons, there may be a lack of financial resources to respond to heavy snowfall, cold waves, sinkhole accidents, etc.
On the afternoon of the 14th, a citizen is paying with a consumer coupon for recovery of people’s livelihood at a butcher shop in Inwang Market, Seodaemun-gu, Seoul. /News 1
◇ Secondary consumption coupon funding, local governments share 10-25%… Ministry of Public Administration and Security: “It is okay to use the disaster fund”
The first consumption coupon was paid in full by the central government. However, the secondary consumption coupon resources must be shared by local governments. Seoul must provide 25%, and other local governments must provide 10%.
There are two main ways for local governments to raise financial resources. This saves money for other items in your budget. You can also raise money by issuing local bonds.
The problem is that many local governments are unable to use this method. In addition to insufficient financial conditions, issuing local bonds for consumption coupons is impossible under current law. Accordingly, the Ministry of Public Administration and Security sent out guidelines to local governments across the country at the end of August stating, “Free resources from the disaster fund can be utilized to the extent that they do not interfere with disaster response.” Disaster funds are money that can be used for relief and recovery in the event of damage from a natural disaster, etc.
At the same time, the Ministry of Public Administration and Security also provided information on accounting methods for using the disaster fund. By depositing the disaster fund into the ‘Integrated Financial Stabilization Fund’, an emergency fund that accumulates spare resources, and sending it back to the ‘general account’, it can be used as a consumption coupon budget.
A view of the main conference hall of the Seoul Metropolitan Council on Sejong-daero, Jung-gu, Seoul. /News 1
◇ Local government: “The Ministry of Public Administration and Security guidelines are also conditional, so won’t the Board of Audit and Inspection point out this later?”
However, local governments are hesitant to use disaster funds as a source of consumption coupons. Gwangju Metropolitan City decided to postpone the provision of 20 billion won for the second payment of consumption coupons while preparing a supplementary budget. The intention is to wait until the revision of the Local Finance Act, which states that ‘local bonds for consumption coupons are possible,’ passes the National Assembly and a legal basis is established.
A local government official said, “In the past, the Board of Audit and Inspection decided that using the disaster fund for other purposes could cause problems, so local governments are not willing to follow the guidelines of the Ministry of Public Administration and Security.”
In fact, in 2014, the Board of Audit and Inspection discovered that disaster and disaster funds were used for general business budgets and local bond repayments through an ‘audit of the operation status of disaster and disaster funds’ for metropolitan governments across the country and requested disciplinary action for related officials.
This time, the Ministry of Public Administration and Security received prior consulting from the Board of Audit and Inspection while issuing guidance to local governments that “disaster funds may be used to finance consumption coupons.” To ensure active administration, the Board of Audit and Inspection’s opinion was sought in advance. The purpose is to prevent public officials from not doing what they should do out of fear of subsequent disciplinary action.
In response to this, another local government official said, “This Ministry of Public Administration and Security guideline does not mean that the disaster fund can be used without restrictions, but places a constraint ‘to the extent that it does not interfere with disaster response.’” He added, “If disaster funds are used for consumption coupons and problems arise in disaster response, the public official in charge may be subject to disciplinary action.”
On the afternoon of February 6, when a heavy snow warning was issued for Seoul, Seoul city officials are removing snow from the area of Gwanghwamun Square in Jongno-gu, Seoul. /News 1
◇ Seoul City: “We are in a situation where we need to replenish the disaster fund by borrowing.”
Last month, the Seoul Metropolitan Government confirmed its supplementary budget by drawing 350 billion won in financial resources from the disaster fund for the second payment of consumption coupons. A city official said, “We need to use the disaster fund to respond to winter snow removal, cold waves, and emergency recovery of ‘sinkholes,’ but the fund has become insufficient (as we divert funds from consumer coupons).”
The city of Seoul is pursuing the issuance of local bonds as a way to supplement the insufficient disaster fund by providing financial resources through consumption coupons. However, they say they are worried about the interest burden. The standard interest rate for 5-year local bonds in Seoul is around 2.9% per year. It is expected that the final decision on issuance of local bonds will be made in accordance with the timing of the base interest rate cut.
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