Finance Minister vows to 'review every government program' during Washington visit

Economy

Published: 21 Apr. 2024, 18:48

Finance Minister vows to 'review every government program' during Washington visit

Korean Finance Minister Choi Sang-mok, left, poses for a photo with his Ukraine counterpart, Sergii Marchenko, after signing an agreement on low-interest loan programs for Ukraine in Washington on Friday. [MINISTRY OF ECONOMY AND FINANCE]

Finance Minister Choi Sang-mok vowed to “review every government program from the ground up” in order to secure funding for President Yoon Suk Yeol's policy plans at a news conference in Washington.

The conference was held during Choi's visit to the U.S. capital for the G20 Finance Minsters and Central Bank Governors Meeting and the first trilateral gathering with his counterparts from the United States and Japan.

President Yoon has outlined a series of policy pledges, including a 2.6 trillion won highway project and an expansion to the Great Train Express, or GTX, during 24 rounds of town hall meetings across the country since January.

“We are taking the voice of people who came up during the town hall meetings seriously and trying to keep the promises as much as possible,” Choi said.

“We first need to ‘empty the cup’ [to secure the necessary budget], so we plan to review every aspect from the ground up in terms of financial soundness.”

The minister forecast that Korea's inflation would gradually slow to the 2 percent level by the latter half of this year despite ongoing geopolitical uncertainties, in line with the government's previous projection.

Choi also signed a framework agreement on low-interest loan programs with his Ukrainian counterpart, Sergii Marchenko, in Washington on Friday, according to the Ministry of Economy and Finance.

The framework paves the way for Seoul to carry out its pledge to supply $2.1 billion in low-interest loans to the war-torn country with economic cooperation funds.

Last year, Korea vowed to provide an additional $2.3 billion in aid to Ukraine. The initial $200 million of aid will be provided this year in the form of humanitarian aid in response to emergency needs; the remaining $2.1 billion will be administered as long-term low-interest loans through the Economic Development Cooperation Fund (EDCF) starting in 2025.

“Friday's arrangement was meant to lay the legal foundation of credit assistance. The two sides agreed to explore projects together that help Ukraine's reconstruction and development,” the ministry said in a release.

Choi additionally attended committee meetings of the World Bank and the International Monetary Fund (IMF) on Friday and proposed the expansion of the World Bank's co-financing platforms in cooperation with private entities and various other partners as part of efforts to become a “better and bigger bank.”

Choi also proposed a replenishment meeting of the International Development Association (IDA) in Korea in December.

The IDA, under the World Bank, provides grants and low-interest loans to low-income countries. Partners meet every three years to replenish its resources and review its policy framework. Talks for the 21st resource replenishment are under way.

During a separate meeting with IMF Managing Director Kristalina Georgieva, Choi signed a $55.96 million grant agreement for the organization's Poverty Reduction and Growth Trust (PRGT) program.

The PRGT program aims to provide zero-interest loans to low-income countries. Korea has pledged to donate to the fund through 2027, the ministry said.

While in Washington, Choi also met with Roberto Sifon-Arevalo, sovereign managing director of global rating appraiser Standard & Poor's Global Ratings and held talks regarding Korea's economic situation and various policy steps to spur growth, promote financial soundness and attract foreign investors.

BY SHIN HA-NEE, YONHAP [shin.hanee@joongang.co.kr]