After impeachment, Yoo calls for stabilityFinance Minister Yoo Il-ho reaffirmed his commitment as the nation’s chief economic policymaker after Prime Minister Hwang Kyo-ahn, the acting president, said earlier this week that he could continue in his role following some confusion over who would lead Korea’s economic policy.
Yoo reassured the press on Wednesday that the government would pre-emptively counter any risks caused by uncertainties, including the recent impeachment of President Park Geun-hye. He added that the government would continue executing its budget as planned and expressed skepticism about the need for a supplementary budget.
“As long as I am the deputy prime minister [for economic policy], I will obviously [commit to my role] with control,” Yoo told reporters during his second visit to the press room in Sejong since taking the role in January this year. “All public servants, including the ministers of different departments, will do our best in every aspect with responsibility and a sense of historic duty at a time like this. Because we are in an unusual political situation, we will actively communicate with the National Assembly and increase our efforts to improve the people’s livelihood.”
The minister stressed that the government would swiftly counteract any irregularities in the nation’s economy. “We have an emergency task force in operation and will work on maintaining the external credibility [of the country], which is very important.”
There had been ambiguity over who would lead the government’s economic policymaking after Park last month unexpectedly nominated Financial Services Commission Chairman Yim Jong-yong to succeed Yoo as finance minister. Yim, though, was never confirmed by the legislature.
For more than a month, both men seemed to be taking up the mantle of finance minister without any directives from the Blue House as the Park administration was ensnared in the influence-peddling scandal involving Choi Soon-sil.
Many experts raised concerns that the absence of a single chief economist would only build confusion and further damage the public’s trust in the government. Finally this week, Prime Minister Hwang gave Yoo the green light to continue in his role.
Since then, the finance minister has been making efforts to reassure investors and other market participants of the Korean economy’s stability. Earlier on Wednesday, he had a phone conversation with U.S. Treasury Secretary Jacob J. Lew, where he emphasized that the government was stable regardless of the ongoing political situation and reaffirmed the two countries’ close economic and financial cooperation.
“Since the impeachment, the stock and foreign exchange markets have shown much stability, and the credit default swap spread [which is used to measure sovereign risk] has actually been lowered,” Yoo said.
Fitch Ratings was the latest international credit rating agency to confirm the limited economic impact of the country’s current political state. In a report released Wednesday, Fitch said, “The lengthy political crisis that resulted in the impeachment of Korea’s President Park Geun-hye has highlighted governance weaknesses, particularly those that stem from close ties between the country’s large corporations and its government.”
However, it added, “Korea’s political institutions appear strong enough to ensure an orderly and constitutional resolution without a significant negative impact on the sovereign credit profile.” Moody’s and S&P Global have made similar statements.
Regardless of the political climate, Yoo emphasized that downward risks stemming from the economy may continue through next year. “Even before the impeachment, which is a political problem, internal and external uncertainties have been exceptionally high, and there have been signs of a decelerating economy,” Yoo said, hinting at uncertainties surrounding Donald Trump’s trade policies.
“Next year, we will front-load the budget in the first quarter and expand investment in energy and new industries related to public institutions, which is part of strengthening fiscal policy,” Yoo said. “We will also work on lowering internal risks by pre-emptively restructuring the real estate market and related household debt.”
The finance minister said that measures so far have been showing some results and currently has no plans of resorting to a supplementary budget. “It’s only been 10 days since a [400 trillion won, or $342 billion] budget has been passed,” Yoo said. “I can’t say we might not consider a supplementary budget, but we have no choice but to make a judgment after watching the situation in the first quarter next year.”
The government plans to release its economic management plans for next year no later than Dec. 28.
BY LEE HO-JEONG [firstname.lastname@example.org]
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