[2024 National Audit] Choi Sang-mok "Utilizing the Foreign Exchange Fund Unavoidable to Secure Available Funds"

Comprehensive Audit of the Planning and Finance Committee Held on the 28th
Ruling and Opposition Parties Debate Measures to Address Tax Revenue Shortfall
Ministry of Economy and Finance: "No Impact on Foreign Exchange Market Response"

Choi Sang-mok, Deputy Prime Minister for Economy and Minister of Strategy and Finance, stated at the National Assembly on the 28th that "we had no choice but to consider utilizing the Foreign Exchange Stabilization Fund (FESF) in the process of securing available funds."

Deputy Prime Minister Choi made this remark during the comprehensive audit of the Ministry of Strategy and Finance held by the National Assembly's Planning and Finance Committee on the same day, in response to criticism regarding the Ministry's change in stance on addressing this year's tax revenue shortfall. He explained that although there were many criticisms about the FESF and they initially decided not to use it even if it meant changing the fund operation plan, the use of the FESF became inevitable in the process of preparing measures to cope with the tax revenue shortfall.

Choe Sang-mok, Minister of Economy and Finance and Deputy Prime Minister for Economic Affairs, is speaking at the Comprehensive Audit of the Ministry of Economy and Finance held by the Planning and Finance Committee at the National Assembly on the 28th. Photo by Kim Hyun-min

Earlier, the Ministry of Strategy and Finance reported fiscal response measures to cover this year's tax revenue shortfall of 29.6 trillion won during the audit. The plan included utilizing available funds such as approximately 4 trillion won from the Public Fund Management Fund, 4 to 6 trillion won from the FESF, and 2 to 3 trillion won from the Housing and Urban Fund. This was contrary to Deputy Prime Minister Choi's statement during the September National Assembly Planning and Finance Committee briefing that the FESF utilization was "not being considered."

Regarding this, Jeong Tae-ho, the opposition party's secretary of the Planning and Finance Committee from the Democratic Party of Korea, pointed out the Ministry's change in position, saying, "The Ministry said it would not consider additional funding from the FESF, so why did it?" He added, "They said they wouldn't use it a month and a half ago, but they ended up using the FESF without even looking ahead that far," and noted the same applied to the Housing and Urban Fund. Deputy Prime Minister Choi responded to this criticism by saying, "I will keep in mind the advice to be humble."

During the Ministry of Strategy and Finance audit on the same day, criticism related to the tax revenue shortfall was followed by a heated debate between the ruling and opposition parties. There was even a 50-minute recess after opposition lawmakers protested the Ministry sharing the tax response plan with the media before announcing it at the audit.

Park Seong-hoon, a lawmaker from the People Power Party, evaluated, "Sustainability is the most important aspect of fiscal policy," and said, "I see this as the government's decision to prioritize using available funds within the government without issuing national bonds, in accordance with the National Finance Act."

On the other hand, Yoon Ho-jung, a lawmaker from the Democratic Party of Korea, criticized, "Looking at the fiscal response measures, the government has broken promises to the National Assembly more than once," and said, "The budget is the people's money and managed by the Ministry of Strategy and Finance, but it seems like the Ministry is manipulating the finances at its own discretion like a street vendor."

Meanwhile, the Ministry of Strategy and Finance held a briefing in the morning to explain the background of utilizing the FESF. Ryu Jung-jae, Director of the Treasury Division at the Ministry, said, "There were significant concerns in the National Assembly about the decrease in local government revenues, and funds were needed to minimize this." Kim Hee-jae, Director of the Foreign Currency Fund Division at the Ministry, explained, "It is an unavoidable use within the range that does not interfere with foreign exchange market operations."