Taming Inflation Top Policy for 2nd Half
By Lee Hyo-sik
Staff Reporter
The country's top economic policymaker once again stressed Friday that the government will place a priority on taming inflation in the second half of the year to help stabilize the livelihoods of the low-income bracket amid soaring international oil and other commodity prices.
At an economy-related ministers' meeting, Strategy and Finance Minister Kang Man-soo also said the government will strengthen the role of the Public Procurement Service, the state purchasing arm, to help public institutions and municipal governments buy goods at a lower price and thus cut down expenditure.
``We should reflect public opinion in every policy-making process. As President Lee Myung-bak said earlier, each ministry should make an all-out effort to draw up a range of anti-inflation steps to mitigate the fallout from high oil prices and stabilize the livelihoods of low-income households,'' Kang said.
His remarks came a day after President Lee's nationally televised address designed to calm down public anger over his decision to import U.S. beef. Lee said the government will take all possible measures to curb rises in consumer prices in the coming months.
The government was blamed for spiking the already high prices of imported commodities by keeping the won low against the dollar, forcing businesses and households to pay more for goods and services. This was done to boost outbound shipments and improve the current account balance.
Since abandoning its weak won policy a few weeks ago, the government has unveiled a series of anti-inflation measures in a bid to curb rises in consumer prices, including 10.5 trillion won in tax rebates, and cuts in cell phone rates for those in the low-income bracket.
Minister Kang then called on the National Assembly to pass a revised tax bill aimed at making the country more business friendly and to help low-income families cope with surging fuel costs. On Wednesday, the government approved a number of changes in the tax law, including corporate income tax cuts and the provision of a fuel tax rebate to the self-employed.
``We also hope that a 4.9 trillion won supplementary budget will play a significant role in easing the financial burden on businesses and households, hit hard by rises in raw material prices. The Assembly should also approve the extra budget as soon as possible,'' the minister said.
On Tuesday, the Cabinet decided to draw up the supplementary budget from last year's budget surplus. Out of the 4.9 trillion won, 83.7 billion won will be spent as energy subsidies for low-income people; and 1.26 trillion will be used to make up for deficits at Korea Electric Power Corp. and the Korea Gas Corp., after they refrain from raising energy prices.
The government also allocated 1.4 trillion won for research into new and renewable energy sources, energy saving facilities and overseas oil field development projects.
The Ministry of Strategy and Finance projected that the additional fiscal spending will boost the economic growth rate by 0.07 percentage points, while increasing consumer prices by an additional 0.01 percentage point in the second half.