Finance Minister Hyun under fire for fiscal response

By Korea Herald
  • Published : May 19, 2014 - 21:17
  • Updated : May 19, 2014 - 21:17
The government, hit by a mounting public backlash in the aftermath of the deadly sinking of the ferry Sewol last month, will mobilize budgets scattered among ministries and agencies to better cope with disasters, the finance minister said Monday.

“The government will use not just the money but also other diverse budgets assigned for each ministry and agency, and if the amount is not enough, it could redirect other budget spending and tap into reserve funds in order (to provide) ... fiscal support,” said Hyun Oh-seok, who also serves as deputy prime minister, at a briefing at the National Assembly.

South Korea’s current disaster-related budget is included in the public order and safety category, and this year the total amount stands at about 15.8 trillion won ($15.4 billion).

Hyun also said that the country’s public safety budgets would be focused on training people to prevent disasters, putting in place appropriate response systems and developing methods and technologies needed to prevent national catastrophes.

Further, the deputy prime minister added that that the government would spend an additional 7.8 trillion won in the second quarter amid signs that contraction in domestic consumption following the ferry disaster may be even more severe than feared.

Hyun said this is because economic recovery in the private sector has been sluggish since the tragedy unfolded a month ago.

Consumption sentiment cooled down in the aftermath of the sinking of the 6,825-ton ferry Sewol off South Korea’s southwestern coast on April 16 that left over 300 people killed or missing. The downtrend has triggered concerns about the country’s economy.

The ministry announced earlier this month a set of measures to boost domestic demand, including the increase in its first-half budget spending.

In addition, the government plans to provide about 15 billion won in low-interest loans through its tourism development fund to small companies, which are bearing the brunt of the fallout from the ferry incident due to massive contract cancellations and a sharp drop in demand.

The government also plans to extend the maturity of existing loans made to small companies and make a maximum of 30 billion won in low-interest loans available to them. A company can borrow up to 300 million won through the program.

By Oh Kyu-wook (