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President Lee Jae Myung speaks about the capital market at a meeting of senior presidential secretaries and aides held at Cheong Wa Dae on Nov. 12. /Yonhap News Agency

President Lee Jae Myung said on Nov. 12 that local government finances were managed under excessively rigid rules and called for greater fiscal autonomy to allow local governments to use funds saved through budget cuts for other purposes.

Senior Presidential Spokesperson Kang Yu-jung said in a written briefing that Lee made the remarks after receiving a report on local government finances during a closed-door meeting that day.

Earlier, the Office of the Senior Secretary for Political Affairs reported that local tax revenue was growing more slowly than national tax revenue due to a downturn in the real estate market, while expanding social welfare budgets were making fiscal management increasingly rigid. The office also assessed that local government deficits were worsening as authorities issued local government bonds to make up for funding shortfalls.

In response, Lee pointed out that local government fiscal management was too rigid, saying, "We need to improve the system so that funds saved through budget cuts can be used for other purposes."

He continued, "Local governments need greater discretion and autonomy, and any unreasonable or outdated aspects of rigid expenditure requirements should be improved in practical and realistic ways." His remarks underscored the need to give local governments greater freedom in managing their finances.

Lee also said, "True innovation is not simply about increasing financial support, but about creating an environment in which local governments can actively attract businesses and secure their own sources of tax revenue." He also stressed the need to establish a system of competition among local governments.

                                                                                                         Park Young-hoon