Even Jeonnam's Local Bond Quota Goes to Gwangju Projects
In the first supplementary budget drawn up since the Gwangju–Jeonnam consolidation, spending is concentrated on projects from the former city of Gwangju — so much so that even the local bond issuance quota (bonds issued by local governments to borrow money) left over by pre-merger Jeonnam will be used up in full. The Jeonnam-Gwangju Consolidated Special Metropolitan City has asked its city council to approve 119.8 billion won in local bonds for the first supplementary budget. Broken down by item, the largest share, 46.2 billion won, is for refinancing — repaying the principal on existing debt and borrowing it anew. Next come 41.5 billion won in relief funds for the “high oil price” period (when oil prices surged) and 30 billion won in construction costs for Gwangju Metro Line 2. Former Gwangju's basic issuance quota has already been exhausted. Even drawing on all 46.5 billion won of the quota left with pre-merger Jeonnam falls short, so the remaining 27.1 billion won will be issued beyond the statutory issuance limit.
There was a gap in debt from the starting line. At the time of the consolidation, the combined debt of the two local governments stood at 3.6 trillion won — 2.2 trillion won for former Gwangju and 1.4 trillion won for Jeonnam.
The consolidated city promised that Gwangju's debt would not become Jeonnam's burden. In the city council, criticism emerged, with Councilor Choi Seon-guk pointing out, “Legally, it may be defensible, but in substance it is a passing of the debt burden.” Yun Chang-mo, the city's strategic planning officer, acknowledged, “It is true that former Jeonnam's quota was used.” While Jeonnam's budget is not flowing directly to Gwangju, the point is that the bond issuance capacity that could have gone to projects in the Jeonnam region has shrunk.
Some members of the consolidated city council called for postponing the 30 billion won for Gwangju Metro Line 2 to next year or cutting it. “Since local bonds will likely be issued next year, this project should be cut,” said Councilor Moon Gap-tae.
Debt and quotas to be bundled into one. The city's position is that, after the consolidation, local bond quotas must also be managed as one. It also said it would build an integrated debt management system once the organizational restructuring is complete. “Once this organizational restructuring takes place, a finance officer will be established under the Financial Planning Headquarters, and that officer will manage finances in an integrated manner,” explained Yun Chang-mo, acting head of the city's Planning and Coordination Office.
The consolidated city council demanded that, if only to honor the spirit of the merger, the city disclose the entire debts of Gwangju and Jeonnam and first submit a concrete repayment plan.
