Can Bahk backstop power slide?

By Kim Tong-hyung

In facing the challenge of his career as the country’s top economic policymaker, Bahk Jae-wan, a self-admitted sports fanatic, used a baseball analogy to describe his role at the helm of the finance ministry.

Bahk recently replaced the popular Yoon Jeung-hyun, who was credited for his role in navigating the country out of the financial crisis but struggled to cope with the quandary presented by slow growth and higher prices.

Bahk has his work cut out for him, as consumer prices continue to lose their sense of gravity and the full-scale recovery of the economy appear less certain, and in a lunch meeting with reporters Wednesday he vowed not to drop the metaphorical ball.

``My view is that the President (Lee Myung-bak) is the manager and the finance ministry is the catcher,’’ said Bahk, a loyal Lotte Giants fan.

``The catcher has to compose the infielders and make decisions for the pitcher, must not make any crucial mistakes and throw his body around to prevent pitches from passing behind him. It’s definitely a gruesome and physically-challenging job, but the finance ministry has to do it,’’ he said.

The pitchers could be the Knowledge Economy Ministry or the Land, Transport and Maritimes Affair Ministry depending on whether the issue is exporting nuclear reactors or restoring the country’s four major rivers, according to Bahk’s view.

Well, as baseball people would say, there are two types of catchers. First there are the game-manager types that dictate to pitchers and fielders and control the flow of the game with smarts and savvy. Then there are the mechanical ones who aren’t expected to provide creative input but merely act as puppets of the dugout.

It bears further watching what type of ballplayer Bahk is. Inflation, which has been at least a point above the government’s 3 percent target for every month through May this year, is piling the pressure on policymakers to clamp down hard on money supply.

But it’s difficult to do just that when a pre-election Cheong Wa Dae clings to the hope that it could continue to put growth before price stability a little longer.

Heading into the year, the government expected 5 percent economic growth on 3 percent inflation for the year, but the targets have been looking ridiculous for some time now as policymakers struggle to contain the inexorable rise in consumer prices. With Bahk now calling the shots, the finance ministry will likely rewrite the forecasts although the changes may prove to be cosmetic.

``Consumer prices are clearly my biggest concern. There is only so much the government can do to contain inflation, so I am worried,’’ Bahk said.

``We will closely monitor the movement of rent prices ahead of the fall season. The options are limited in terms of what we can do in the short-term and the prices of some major items like fuel are dictated by international prices.’’

The difficult economic conditions, as well as the ruling Grand National Party (GNP)’s crushing defeat in the by-elections last month, have also jeopardized the administration’s plans for tax cuts and deregulation, which have been at the core of growth-force ``MBnomics’’ and the centerpiece of Lee’s domestic agenda.

The GNP, which is desperate for votes from lower- and middle-income voters ahead of next year’s parliamentary and presidential elections, has all but withdrawn its support for Lee’s long-planned tax cuts. Bahk, however, insists that he will continue to push for the reductions on both income and corporate tax rates.

The government has been seeking to shave the rate of income tax by 2 percent, from 35 to 33 percent, for those in the top income bracket _ individuals making more than 88 million won (about $81,000) a year. The corporate tax rate was to be reduced to 20 percent from 22 percent.

As for deregulation, Bahk said that the finance ministry will continue to work with the Ministry of Health and Welfare to iron out their differences on allowing over-the-counter drugs to be sold in supermarkets and other non-pharmacy outlets.

``We have to hope that lowering tax rates will push up consumption. You also have to consider the widening burden from non-tax expenses related to welfare, like the spending on the four major types of insurance for pension, health, employment and workplace injury coverage,’’ he said.