S. Korea needs to maintain fiscal soundness: minister

SEOUL, July 5 (Yonhap) -- South Korea's top policymaker reaffirmed Tuesday that the country needs to maintain tight fiscal spending to better prepare for a spike in demand for future spending. "Now is the important moment (for us) to secure fiscal capacity in order to brace for diverse fiscal risk factors down the road," Finance Minister Bahk Jae-wan told a government meeting held in central Seoul. He cited the low birthrate, aging population, slowing economic growth and cost from possible unification with North Korea as the reasons for tightened fiscal spending. His remarks come as the sovereign debt crisis weighs on some European countries in the wake of the global financial crisis and the subsequent worldwide economic downturn. South Korea remains in relative good shape in terms of fiscal soundness, but there have been growing calls for increased spending on the social safety net. Policymakers have not been receptive as they want to maintain the current stability in order to better prepare for future uncertainties. Touching upon the growing demand for expanded welfare programs ahead of major elections next year, Bahk worried that "welfare populism" could make it tougher for the government to stay fiscally sound. The minister noted that now is the time "to think about how to save for future demand." In his inauguration speech last month, Bahk stressed the importance of strengthening the country's fiscal status and achieving a budgetary balance along with job creation and price stability.