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[News Analysis] S. Korea’s longest serving finance minister burdened with recovery, real estate tasks

Finance Minister Hong Nam-ki (Yonhap)
Finance Minister Hong Nam-ki (Yonhap)
Finance Minister Hong Nam-ki is set to become the longest serving fiscal chief in South Korean history, but his leadership is facing public pressure for the revival of an economy battered by the COVID-19 pandemic and to appease discontent on job creation and real estate policies.

By Thursday, Hong will pull ahead of Yoon Jeung-hyun -- who served for 842 days under the Lee Myung-bak administration -- as the nation’s most durable chief economic policymaker and deputy prime minister. He has served since Dec. 11, 2018.

Having taken office when the country’s gross domestic product growth had slowed to a six-year low, he was tasked with making a new growth model for a quick transition. The coronavirus-induced economic downturn and record-high jobless rate remain an uphill battle for him.

To cushion the blow of the virus, the country earmarked four supplementary budgets in a single year -- totaling 310 trillion won ($273.8 billion) -- for the first time in 59 years.

On Thursday, the National Assembly approved another supplementary budget worth nearly 15 trillion won to help prop up small merchants and the vulnerable hit hard by the yearlong COVID-19 pandemic.

Juggling between mounting national debt and ailing small businesses, Hong has often faced criticism from vote-conscious municipal heads and even the ruling party, who have called for more radical financial support.

Due to the political pressure exerted on him, Hong has had to change his policy direction. He was initially opposed to the idea floated by the ruling party of handing out emergency cash to all households with the first round of stimulus checks. But he later agreed to opt for universal payouts.

Although the minister has been voicing the importance of maintaining the sustainability of state finances and organized policy implementation in providing financial support, his remarks have often been disregarded.

“The process of drawing up four rounds of extra budgets has prompted plenty of controversy involving financial soundness and economic revitalization. But I think the minister has been trying to keep his balance as the top economic control tower,” Rep. Kim Ju-young of the ruling party and a member of the National Assembly’s finance committee said.

The unemployment rate which soared to a 21-year high of 5.4 percent in January also caused serious concerns. The figure improved to 4 percent in February, but criticism has been raised concerning the government’s response.

“Among some 160,000 jobs that the government said it would create for the youth, 100,000 were jobs that pay minimum wage. Around 124,000 were six-month temporary jobs,” Rep. Choo Kyung-ho of the main opposition People Power Party said.

Despite the fallout, Hong is expected to serve his job until President Moon Jae-in completes his five-year term in 2022.

In November last year, Hong offered to resign amid public criticism over plans to tighten tax rules for large shareholders, but the president rejected the offer. The government had planned to impose capital gains tax on domestic individual investors holding more than 300 million won in shares of a single company. But it decided to maintain the threshold at 1 billion won due to public discontent.

By Park Han-na (hnpark@heraldcorp.com)
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