SEJONG -- Vice Finance Minister Lee Eog-weon said Thursday the Ukraine-Russia conflict could have a “long-term” negative effect on the South Korean economy, and that the extent of coming impacts is unpredictable at the current stage.

During a task force meeting in Seoul, Lee said the uncertainty from the geopolitical risk has expanded in the wake of the Russian invasion of Ukraine and as the international community continues to pile on sanctions against Russia.

“It has gradually been hard to prejudge the (unfavorable) impacts, routes and ranges on the local economy from Russia’s armed aggression and the possible additional sanctions of the global community,” he told the meeting.

In response, he said the government would concretize support measures for export-oriented businesses and will draw up a detailed list of companies involved in trade with Ukraine or Russia suffering financial damages from the fallout.

“(The government) plans to provide emergency funds worth up to 2 trillion won ($1.6 billion) collectively, as soon as possible,” he said.

Alongside measures for major conglomerates, he said the Finance Ministry is working on offering support to small and midsize enterprises in a separate manner, adding that the aid packages for SMEs would be unveiled in the coming days.

The vice minister also said “it is hard to rule out the possibility that the local financial market will see the volatility expand.”

Apart from the Ukraine-Russia war, he also singled out globally common risks including interest rate hikes in major countries and the spike in crude prices as factors that could aggravate downside risks on the local capital market.

“(The government) would bolster management of liquidity in foreign currencies, held by financial services firms by operating contingency plans for 24 hours a day,” he said.

He also said “negative impacts, unexpectedly, could spread to a variety of industrial sectors, such as information-communication technologies, overseas construction, and maritime-fisheries.”

Earlier this week, Lee met with US Deputy Treasury Secretary Wally Adeyemo in Washington, DC, to discuss matters involving Korea’s financial sanctions on Russia, and expressed the Korean government’s willingness to actively participate in the international effort to pressure Moscow.

“The two sides have agreed to carry out close coordination on the international security,” he said. “The US has welcomed the measures (financial sanctions against a group of Russian banks).”