Korea to keep inflation below 3%, accelerate won internationalization

President Lee Jae Myung listens to policy briefings by economy-related ministries at Cheong Wa Dae in Seoul, Wednesday. Joint Press Corps

The government will focus on keeping consumer inflation below 3 percent in the second half of the year while accelerating the internationalization of the won, including measures to allow foreign investors to trade the Korean currency more freely offshore, Finance Minister Koo Yun-cheol said Wednesday.

The finance ministry will also seek to enact a new national assets law to overhaul the management of more than 1,400 trillion won ($938 billion) in state-owned assets and broaden the framework to include emerging assets such as intellectual property and virtual assets.

Koo outlined the plans to President Lee Jae Myung as part of a 10-point economic agenda for the second half of the year. The policy package focuses on stabilizing prices, fostering new growth engines and reforming the nation's economic systems.

He said the ministry will launch unprecedented discount promotions on agricultural, livestock and fisheries products while lowering wholesale supply prices to curb rising price pressure fueled by the Middle East conflict and keep second-half consumer inflation below 3 percent.

It will also decide whether to lift price caps on petroleum products and extend current fuel tax cuts, depending on global oil prices and market supply conditions.

As part of efforts to secure future growth, the government will expand investment in three megaprojects — semiconductors, artificial intelligence (AI) data centers and physical AI. To support these initiatives, the ministry will allow private contracts for state-owned land, cut land-use fees and streamline preliminary feasibility studies for public institutions.

The ministry will also unveil a road map this month to internationalize the Korean won, including establishing an offshore won settlement system and easing foreign exchange regulations.

Finance Minister Koo Yun-cheol, center, speaks during policy briefings to President Lee Jae Myung at Cheong Wa Dae in Seoul, Wednesday. From left are Financial Services Commission Chairman Lee Eog-weon, Koo and Budget Minister Park Hong-keun. Joint Press Corps

The foreign exchange reforms come as Korea seeks inclusion in the developed-market category under the Morgan Stanley Capital International (MSCI) index.

Asked by Lee about the biggest obstacle hindering Korea from joining the index, Koo pointed to current restrictions on won trading.

"The biggest demand is to allow investors to trade the won around the clock and open accounts more easily," Koo said.

However, he cautioned against opening the market too quickly.

"If we expose our foreign exchange market all at once without being fully prepared, it could backfire," he said. "We plan to implement extensive regulatory improvements by early next year. By then, we will have adequate safeguards and systems in place to move ahead more aggressively."

The ministry also plans to introduce a new law to overhaul the management of state-owned assets. It said the current State Property Act, enacted in 1950, is built around a real estate-focused asset framework and does not adequately cover newer asset classes, including intellectual property and virtual assets.

Meanwhile, the Ministry of Planning and Budget presented plans to formulate a long-term national development strategy through 2045, the centennial of Korea's liberation, to set the country's future vision and serve as the government's highest-level blueprint for long-term policy direction and budget planning.

The ministry also aims to press ahead with structural reforms, including revisions to the local education grant and basic pension systems, while improving fiscal efficiency through a broad spending review. Under the proposal, all fiscal programs will be reassessed from a zero base, with discretionary spending reduced by 15 percent and mandatory spending by 10 percent.

The National Tax Service, for its part, said it will strengthen public finances by integrating the collection of nontax revenues and reforming its delinquent tax management system. The agency also plans to overhaul its administrative infrastructure through a broad AI-driven transformation.

The Financial Services Commission said it will expand the National Growth Fund, a mega-sized investment vehicle aimed at fostering strategic industries, to 200 trillion won from the originally planned 150 trillion won over five years to strengthen Korea's competitiveness in advanced industries.

The financial regulator also plans to establish a dedicated investment vehicle for strategic technologies to expand policy financing for future growth industries while continuing efforts to manage household debt and promote financial innovation.

The president said the remaining three years and 11 months of his presidency would be crucial and called on ministries "to prepare for the long-term implementation of policies aligned with the administration's policy agenda."

The policy briefings marked the second round since Lee took office and were intended to assess progress on directives issued during the first round late last year while reviewing key policy priorities for the second year of his administration.

The sessions will continue Thursday with the science, transport and health ministries, with the remaining ministries scheduled to present their policy plans in August.