Yeongjong-gu District (Mayor Son Hwa-jeong) in Incheon has decided to repay in full, ahead of time, a temporary loan of 18.1 billion won taken out when the area was part of the former Jung-gu District. The Incheon Metropolitan Government has not yet finished the process that will decide which district takes on the debt and how much of it. The district said it made the decision to prevent late interest from building up if repayment were delayed in the meantime. It announced on the 19th that it reached the decision after talks with the city government, and it urged Jemulpo-gu District to take part in the review that will determine how the debt is shared.
 [The Korean Today] Yeongjong-gu District logo © Reporter Kim Mi-hee |
The decision came at the city government's request. The city confirmed that the temporary loan is a debt to be borne by both Jemulpo-gu and Yeongjong-gu. It then asked the district to make the repayment, saying it would move quickly to finish designating which district succeeds to the debt in each area.
Despite its tight finances, the district moved up the repayment, trusting the city's promise to make the succession designation promptly. According to the district, putting off repayment until the designation is finished would waste budget money on avoidable costs such as late interest, and residents would ultimately carry that burden. The district described the move as a preemptive decision made "for the greater good."
The district made clear, however, that paying first does not mean it accepts responsibility for the entire temporary loan. In its view, paying the money upfront and deciding who is ultimately liable for the debt are separate matters. Once the city's administrative designation fixes the amount Jemulpo-gu must bear, the district plans to ask Jemulpo-gu to return the share it paid on its behalf as soon as it is notified of the final result.
The district said it will fully accept the outcome of the city's objective review in setting the cost-sharing ratio. It noted that the scope of repayment and the question of responsibility are matters on which the two sides' interests sharply diverge. For that reason, it argued, the decision should come from a credible third-party institution rather than from either party's one-sided claims. The district added that it has held to this principle and has cooperated fully whenever the city government, which holds legal authority over administrative designations, requested documents or consultations.
The district also welcomed Jemulpo-gu's recent statement. In a press release on the 13th, Jemulpo-gu said the temporary loan issue should be resolved based on existing agreements, legal review and objective facts. Yeongjong-gu welcomed the statement, saying it matches the principles Yeongjong-gu has consistently put forward.
At the same time, the district said that since Jemulpo-gu has moved away from what it called its one-sided silence and officially stated its support for a resolution based on objective review, it should take part in good faith in the actual review. It said Jemulpo-gu should actively participate when the city examines how the temporary loan was taken out and how the money was spent during the designation process.
The district cited how the borrowed money was actually used as the basis for dividing the debt. "The temporary loan issued by Jung-gu at the time was a public debt for statutory expenses, and a look at the spending records shows that the portions used in Jung-gu's old downtown and in the Yeongjong area can largely be distinguished," the district said. "It is a matter of common sense that Jemulpo-gu, which succeeded the old downtown area of Jung-gu, should bear the loan amount spent there," it added.
Criteria for the decision are already in place. Under an authoritative interpretation by the Ministry of the Interior and Safety, when a local government is abolished, the successor government for its debts should be designated after weighing factors such as how and why the debt arose and who benefited from it. Accordingly, the city's designation process is expected to clearly determine the share of the debt each of the two districts will bear.
"Since Jemulpo-gu has also said it wants an objective review, we hope it will take part in good faith in the upcoming review for the city's administrative designation, in keeping with the 'mutual development' purpose of the administrative system reorganization, and accept the final result," a Yeongjong-gu official said.
The case is the first test of how the two districts will settle debts left over after the former Jung-gu was split up under the administrative system reorganization. The city's designation and whether Jemulpo-gu takes part in the review are expected to set the principles for sharing the debt and to determine how large a financial burden residents of each district will carry.
[ Reporter Kim Mi-hee: incheonsouth@thekoreantoday.com ]
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