By Park Hyong-ki
Cheong Wa Dae, policymakers and lawmakers have entered the rough-and-tumble arena of dirty politics, squabbling and claiming their own versions of the truth over Shin Jae-min's stories about state bonds.
Shin, a former finance ministry worker, claimed in a Jan. 2 press briefing that Cheong Wa Dae abused its power and tried to pressure the finance ministry to issue bonds more than it was legally allowed to in November 2017.
The opposition Liberty Korea Party (LKP) wants to launch a hearing on the matter through the National Assembly's finance committee as soon as possible to uncover the truth, saying President Moon Jae-in should "respond" to the allegations.
It said this is becoming another government scandal equivalent to the one that had involved former President Park Geun-hye and her close associate Choi Soon-sil, comparing Koh Young-tae, a whistleblower of the Park-Choi scandal, to Shin.
 |
| Shin Jae-min, a former finance ministry worker, holds a press briefing Jan. 2 accusing Cheong Wa Dae of pressuring the ministry to issue bonds more than its legal limit in Seoul. He tried to commit suicide afterwards. Yonhap |
"Also, it will increase policy risks," he said, noting it could further undermine sentiment even though the bonds did not have a huge effect on the market then.
Cheong Wa Dae, the finance ministry and the ruling Democratic Party of Korea (DPK) have been refuting Shin's claims, while trying to dent his credibility. The ministry filed a complaint with the prosecution against Shin for leaking state documents, right after Shin's Jan. 2 press conference.
"Cheong Wa Dae did not pressure the ministry, and the ministry reached a decision not to issue bonds after consulting with the presidential office," the finance ministry said in a press statement on Jan. 1.
If endorsed by the National Assembly, the government can issue those bonds mainly to raise funds to reduce its debt obligations by buying back existing bonds purchased by the central bank or institutional investors, and paying down interest owed to investors.
Once so-called deficit-covering bonds are issued, they will be recorded as debts in state accounting. Should the debt grow, its finances will get worse, which will then affect its sovereign rating and foreign capital inflows.
Shin claimed the finance ministry did not have to issue the bonds because the government was able to reduce its debt from higher-than-expected tax revenue in accordance with the law.
The law clearly stipulates that if the government is able to collect a lot more taxes than it had expected, it will have to use the money to repay its debts.
The Moon administration allegedly sought to issue more bonds with the purpose of making the increasing debt look like it was the former Park Geun-hye government's fault, Shin claimed.
In the end, it did not issue additional bonds, nor did it buy back ones held by investors.
 |
| Finance ministry officials head for the Seoul Central District Prosecutors' Office to file a complaint against Shin for a breach of confidentiality on Jan. 2. Yonhap |
But the ministry reached a conclusion not to issue more bonds, Koo told reporters.
There were suggestions to issue bonds worth 8.7 trillion won, of which 4 trillion won should be retained for future spending, he noted.
In 2017, the National Assembly approved a plan for the total bond issuance of 28.7 trillion won. The former Park government issued bonds worth 20 trillion won as of the end of October 2017.
Analysts say Shin may have misunderstood the whole situation.
The government does not have to use all the money raised from such bonds or tax revenue for paying back debts. Some of it could be set aside for future welfare and infrastructure spending, while some could be used to reduce its debt obligations, they said.
"Just because the government had higher-than-expected tax revenue, it does not mean it has to pay back its debt all at once," said Cho Young-chol, a visiting economics professor at Korea University, posted on Facebook.
Cho is one of the members of the Presidential Commission on Policy Planning.
![[INTERVIEW] Lee Jun-hyuk unrecognizable in 'The Roundup: No Way Out'](https://img.koreatimes.co.kr/upload/thumbnailV2/77a9da6df7da4284adbee249a87307c1.jpg/dims/resize/178/optimize)
