Hong Nam-gi Takes Steps to Resolve 'Policy Discord'... Lee Ju-yeol, Ko Seung-beom, and Jung Eun-bo to Meet Later This Month

Scheduled to Preside Over the Macroeconomic and Financial Meeting

Hong Nam-ki, Deputy Prime Minister for Economy and Minister of Strategy and Finance [Image source=Yonhap News]

[Sejong=Asia Economy Reporter Son Seon-hee] Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, is scheduled to meet at the end of this month with Lee Ju-yeol, Governor of the Bank of Korea, Ko Seung-beom, the newly appointed Chairman of the Financial Services Commission, and Jung Eun-bo, the newly appointed Governor of the Financial Supervisory Service, all in one place. This appears to be a meeting for sharing macroeconomic policy perceptions and a courtesy visit with the new heads of financial authorities amid recent controversies over 'policy discrepancies' between fiscal and monetary authorities.

On the afternoon of the 13th, Deputy Prime Minister Hong held a meeting with reporters covering the Ministry of Economy and Finance at the Government Complex Sejong and said, "The government has also been mindful of various criticisms that the combination of financial policy and monetary policy must be well coordinated," adding, "To share perceptions among fiscal, monetary, and financial authorities and to coordinate opinions on policy combinations and risk management, a macroeconomic financial meeting is scheduled to be held within this month." Governor Lee of the Bank of Korea, Chairman Ko of the Financial Services Commission, and Governor Jung of the Financial Supervisory Service are all expected to attend this meeting. This will be the first official meeting between Deputy Prime Minister Hong and Governor Lee in about seven months since February, and it will be the first time that the newly appointed Chairman Ko and Governor Jung will gather in one place.

Deputy Prime Minister Hong explained the background of holding the macroeconomic meeting, saying, "During the COVID-19 crisis, household debt increased, and the expansion of new polarization due to asset inequality has also been pointed out," adding, "Many measures are needed to resolve this, but there are concerns that financial market risks will be highlighted in the process."

It is expected that discussions on the household debt surge in the first half of the year will also take place at this meeting. Deputy Prime Minister Hong said, "Loans were excessively executed in the first half, so to manage the annual loan target, it will inevitably have to be tightened compared to the first half," but added, "We need to devise measures that do not harm actual demanders."

Regarding the COVID-19 National Mutual Aid Support Fund, Hong said, "As of midnight today, 67.2% of payments have been completed," and added, "We are making payments as quickly as possible to keep the promise of 90% payment by the end of this month." In particular, the support fund, which was initially planned to be paid to about 88% of the entire population, is expected to increase to about 90% due to appeals. Regarding the controversy over the 'stretchable payment,' he explained, "Those who clearly exceed the payment criteria set with the National Assembly are not eligible," and "For borderline cases or matters with discretionary room, we intend to support from the citizens' perspective as much as possible, but this does not mean increasing the target to 90%."

Along with the National Support Fund, the Win-Win Consumption Support Fund (credit card cashback), one of the three COVID-19 damage support packages, will be implemented "from the consumption starting next month, compared to the second quarter card usage," and "detailed policies will be announced after Chuseok," he said. The plan is to provide a 10% cashback on the amount exceeding 3% of the average monthly card usage in the second quarter. He also added that the small business loss compensation will undergo its first review on the 8th of next month and payments will begin as early as the end of next month.

Regarding the prices of 16 major seasonal items such as cabbage and eggs, which the government is focusing on managing ahead of the Chuseok holiday, Hong said, "Prices of 14 items including rice have fallen compared to the end of last month, and most have also decreased compared to the same period last year," adding, "We will have special awareness and focus on responding to two items, rice and eggs." Deputy Prime Minister Hong is scheduled to visit a traditional market in the afternoon of the 14th to check prices directly.

On the real estate price stabilization measures, he said, "The focus is on activating short-term housing supply," but also expressed some frustration regarding criticisms of supply shortages, saying, "Compared to the supply volume over the past 5 to 10 years, it is not absolutely insufficient."

Regarding the ongoing discussions in the National Assembly, mainly led by the ruling party, on capital gains tax reform, he said, "We will discuss it in the National Assembly," but expressed concern that "(the capital gains tax reform) will have some form of impact on the real estate market."

Meanwhile, when asked about his thoughts on recently surpassing 1,000 days in office, Deputy Prime Minister Hong replied, "I will not waver until the last moment in public service." Regarding persistent rumors about his candidacy in next year's local elections, he dismissed them, saying, "It is not appropriate to have my mind elsewhere amid the severe economic situation."