Finance minister likely to retain job

Rep. Chung Jin-suk speaks to reporters after stepping down as floor leader of the ruling Saenuri Party at the National Assembly, Monday. Chung said the ruling party should share responsibility for the impeachment of President Park Geun-hye. / Yonhap

By Yoon Ja-young

Finance Minister Yoo Il-ho

Financial Services Commission Chairman Yim Jong-yong

Acting president, Prime Minister Hwang Kyo-ahn, said Monday that the team under Finance Minister Yoo Il-ho should cope with diverse economic risks and issues preemptively to overcome difficulties.

He asked Financial Services Commission Chairman Yim Jong-yong to closely monitor the situation and take necessary measures as there are many variables in the financial and foreign exchange markets.

His remarks were interpreted as Hwang’s decision to leave the economic control tower under Yoo as it currently is, instead of substituting him with Yim or any other person.

In early November, President Park Geun-hye nominated Yim as the new finance minister, amid criticism that Yoo lacked leadership capability. However, it wasn’t approved at the National Assembly amid a confrontation between the ruling and opposition blocs. The corruption scandal involving the President and her confidant Choi Soon-sil and Park’s subsequent impeachment made all other issues trivial.

Even though Prime Minister Hwang wants Yoo to keep the job, it’s unclear whether he will get endorsements from the ruling and opposition parties following the Assembly’s impeachment of President Park.

“It was like having two heads as we had to report to both Yim and Yoo for some time. However, we stopped doing this after a while,” an official at the finance ministry said.

Currently, Yoo is leading the finance ministry, while Yim is only concentrating on his role as head of the financial regulator.

Yoo is likely to remain in the control tower as the current administration under Hwang will continue for eight months at the longest. Switching to a new finance minister may only lead to more confusion.

However, the opposition bloc hasn’t made it clear who they will continue with, leaving the economic control tower in confusion. While Yoo’s leadership was already hurt due to President Park’s nomination of a substitute, appointing a new finance minister means uncertainties will continue for some time.

“Whoever of the two it is, it is crucial to determine who is going to lead the economy,” said Bae Sang-keun, vice president of the Korea Economic Research Institute, adding that the Assembly should give Yoo power to successfully complete the administration’s economic policies if it doesn’t want to approve Yim as soon as possible.

“Due to the political uncertainties, it is difficult for the economic control tower to have full authority. The economy has to deal with multiple risks so time is of the essence,” he said.

As the United States may raise its key rate at the Federal Reserve’s meeting Dec. 13, Korea is facing the risk of capital flight. However, economic stagnation and huge household debt make a key rate hike an option hard to choose for Korea.

The country’s major economic indices have been showing pessimistic signs, with the operation rate of the manufacturing sector falling to 70.3 percent in October and exports expected to contract this year. Debt and the pessimistic job market outlook are also prompting households to cut consumption.