Korea's finance minister urges parliament to approve 2025 budget despite political turmoil

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Korea's finance minister urges parliament to approve 2025 budget despite political turmoil

Published: 08 Dec. 2024, 18:22

JIN EUN-SOO
[email protected]

Audio report: written by reporters, read by AI

Finance Minister and Deputy Prime Minister Choi Sang-mok, center, enters the briefing room on Sunday. [YONHAP]

Finance Minister and Deputy Prime Minister Choi Sang-mok pledged “bold” and “swift” measures to address potential economic fallout following Tuesday's brief martial law announcement.

Choi urged parliament to pass next year’s budget bill and resume talks on critical legislation, including reforms to the financial investment income tax and the lifting of the 52-hour workweek for the chip industry, which he characterized as essential for boosting the domestic economy and competing globally.

“If necessary, we will take bold and swift actions by mobilizing all available means, according to contingency response plans,” Choi said during a Sunday evening briefing alongside economy-related ministries.

“As deputy prime minister, I will lead the economic team in managing the economy as stably as possible,” he added.

Choi stressed the importance of maintaining Korea's market credibility, shaken since Wednesday, and vowed to prevent “even the slightest shake” by hosting economic briefings for foreign investors and engaging directly with international credit rating agencies. Choi also pledged to dispatch financial cooperation ambassadors to major countries and global organizations.

Korea’s stock and foreign exchange markets have been on a roller coaster since Wednesday with uncertainty growing to a new high.

The main index dropped by 2.88 percent during the three trading days following the martial law declaration. The Korean won hit a peak of 1,440 won against the greenback right after Tuesday night's announcement before settling down to 1,424 won.

“The recovery process from the first martial law declaration in 40 years is still ongoing. Korea's financial markets are still dominated by political factors,” said Lee Kyung-min, a researcher from Daishin Securities. “During that process, the Kospi, which has maintained the 2450 level, feebly gave in.”

While no immediate downgrade of Korea’s sovereign rating has occurred, major credit agencies have warned of potential risks if the political turmoil persists.

Fitch Ratings maintained Korea’s AA- rating Friday, stating the revoked decree does not “materially and durably undermine institutional quality or threaten the economic and external finance credit strengths.”

However, it cautioned that “downside risks would increase in the event of a protracted political crisis or sustained political divisions.”

Choi desperately called on the National Assembly to act on urgent economic issues despite the political instability.

He called for a swift passage of the 2025 budget bill, which includes key measures for small businesses, livelihood benefits and senior employment programs to revitalize the economy.

Parliament has stalled the 2025 budget proposal, with the opposition Democratic Party cutting 4.1 trillion won ($2.9 billion) from the Yoon administration's original 677.4 trillion won plan.

The budget impasse reportedly contributed to Yoon's abrupt martial law declaration.

“I request that parliament finalize the 2025 budget proposal promptly so it can be implemented from the start of next year,” Choi said.

He also emphasized the urgency of abolishing the financial investment income tax and finalizing the special semiconductor act.

Choi vowed that the government would not “miss the golden time” to keep industrial engines running.

Measures to enhance competitiveness in chips, AI, shipbuilding and aviation will proceed, alongside tailored support for small business owners within this year, he said.

The briefing on Sunday was attended by ministers of education, science, culture, agriculture, industry, welfare, environment, employment transport, oceans and medium-sized enterprises.

BY JIN EUN-SOO [[email protected]]