To plant seeds, the field must first be tilled

 

Suh Kyoung-ho


The author is an editorial writer at the JoongAng Ilbo.
 
 
President Lee Jae Myung has defended his government’s 2026 budget proposal with what he called a “seed theory.”
 
“We cannot make the mistake of leaving the field idle simply because there are too few seeds to plant,” he said. In an earlier meeting with private-sector experts on fiscal policy, he remarked, “If planting a small measure of seeds today can yield a full harvest in the fall, then of course we should borrow seeds to sow.” His point was that expansionary fiscal spending is necessary. At a broad level, the argument is not without logic.
 
Few argue today for strict adherence to balanced budgets. Under the Moon Jae-in administration, the once-sacrosanct threshold of a 40 percent debt-to-GDP ratio was broken. Even then, Moon asked his finance officials, “On what grounds is 40 percent so decisive?” In truth, no precise basis existed. Still, Korea, unlike reserve-currency nations, cannot print debt without limit. Caution remains essential.
 

President Lee Jae Myung delivers opening remarks at a meeting on fiscal savings at the presidential office in Yongsan District, Seoul, on Aug. 13. [JOINT PRESS CORPS]

 
The 2026 budget projects national debt of 1.4 quadrillion won ($1 trillion), with a debt-to-GDP ratio rising to 51.6 percent — breaching the 50 percent mark for the first time. By 2029, the government plans to hold the ratio to the high-50s, around 58 percent. Yet next year alone, 110 trillion won in bonds will be issued. Interest costs will grow from 36.4 trillion won in 2026 to 44 trillion won in 2029. Each year, more than 100 trillion won will be added to the debt, interest included. Can this really be sustained?
 
One concern is greater dependence on foreign investors. A quarter of Korean government bonds are already held abroad. After Korea’s inclusion in the World Government Bond Index in April 2026, foreign holdings are expected to rise further, with 75 to 90 trillion won in inflows projected. More foreign investment lowers borrowing costs, but the risk cuts both ways. A global financial shock could trigger sudden outflows. Should today’s weak dollar strengthen, emerging economies will face liquidity shortages, and Korea’s small, open economy could be shaken as well.
 

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A second concern is the government’s optimistic outlook. It projects tax revenue to reach 390 trillion won next year and climb to 457 trillion won by 2029, a 4.6 percent annual increase. Yet Deputy Prime Minister Koo Yun-cheol, in a book co-written just before the recent presidential election, warned that Korea may have already passed a revenue peak of 395.9 trillion won in 2022. The contrast between that earlier pessimism and today’s projections raises questions. Without tax reforms or new revenue sources, it is difficult to see revenues consistently growing faster than the economy itself.
 
A third concern is the avoidance of hard choices. Tax expenditures through exemptions and deductions will rise by about 4 trillion won. Major deductions, such as income write-offs for credit card use, remain untouched. The government highlights a record 27 trillion won in spending cuts, yet this is only 3 trillion won more than the previous year. Claims of bold reform appear overstated.
 

Deputy Prime Minister and Finance Minister Koo Yun-cheol explains the 2026 budget proposal during a Democratic Party–government consultation at the National Assembly Members’ Office Building in Seoul on the morning of Aug. 26. [KIM SUNG-RYONG]

 
The deeper issue is that planting seeds requires more than seeds alone. The soil must be tilled, fertilized and weeded. In policy terms, the government must prepare a business environment where investment can take root. Fiscal spending can act as a pump primer only if corporate investment follows. The limits of fiscal-driven growth were evident in the earlier “income-led growth” strategy. With the parliament-controlling Democratic Party pressing ahead with amendments to commercial law as well as the "Yellow Envelope Bill," one must ask whether such moves help prepare the field for the president’s seed theory — or leave it barren.


This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.