Yi Whan-woo is a Korea Times journalist primarily covering finance. He writes in-depth articles on macroeconomy and financial markets and previously covered sports, politics, diplomacy and inter-Korean affairs, among others. Feel free to contact him at yistory@koreatimes.co.kr.
Finance minister vows to take preemptive steps to avert crisis
Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho, left, takes oath before the preliminary audit of his ministry at the National Assembly in Yeouido, Seoul, Tuesday. Yonhap
By Yi Whan-woo
Choo downplays possibility of injecting taxpayer money to curb KEPCO's deficit
By Yi Whan-woo
Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho said Tuesday that the government is considering all options to cope with the volatility of the stock and currency markets in a preemptive manner.
Speaking at the National Assembly on the opening day of its annual audit, Choo reaffirmed the government's plan to reform public organizations intensively in a bid to improve fiscal health through a belt-tightening policy.
Choo's remark came as the stock market has been taking a beating and the Korean won has been plunging against the dollar, which along with the snowballing national debt, adds to the concerns over the Korean economy in the midst of the growth slowdown and high inflation.
“The government will thoroughly monitor financial and foreign exchange markets and will make sure to cope with every possible scenario concerning market volatility in a preemptive manner,” he said during the audit of his ministry.
Choo said that the government is determined to prioritize improving financial soundness, in a bid to keep Korea's sovereign rating stable and ensure the safety of the country's economy.
He noted that the high inflation exacerbated by external risks is now dealing a blow to low-income households and that the government “… won't be disrupted in its attempt to stabilize the costs of basic necessities,” such as food and energy.
Among the counter-inflation measures are the fuel tax cut by the maximum legal cap of 37 percent through the end of 2022, zero tariffs on food items that are in high demand, and a 13.2-percent increase in next year's budget for socially-vulnerable groups.
The government has been addressing the need to improve the efficiency of the public sector as a means to boost its financial soundness.
Accordingly, Choo spoke of a plan to sell off unused properties owned by the government, saying, “It will lead to a cycle of economic development driven by the private sector.”
The finance minister, however, said that the financial deficit of Korea Electric Power Co. (KEPCO), the country's sole electricity provider and one of the multiple loss-making state-run enterprises, will not be settled in the short term.
KEPCO announced last week that it will hike electricity rates by 7.4 won ($0.01) per kilowatt hour for the October-December period.
The hike plan is seen as a desperate bid to curb the firm's net loss, which amounts to 10.76 trillion won in the first half of 2022 alone, compared with a loss of 549.57 billion won the previous year.
“The hike in electricity fees to settle KEPCO's deficit in a short period of time will put a tremendous burden on the people,” the finance minister said. “Under the circumstances, KEPCO's deficit should be dealt with over a considerably long period of time.”
In accordance with the government's belt-tightening policy, Choo said no taxpayer money will be injected to salvage KEPCO.
One of the topics brought up by the lawmakers was the decision-making process concerning the now-scrapped plan to build a new guest house for foreign VIPs.
The construction was estimated to cost hundreds of billions of won and was dropped due to the public's objection.
Choo said the controversial plan had been decided through sufficient discussion within the ministry involving working-level officials. No outside figures were involved in the decision-making process.