Korea's finance minister said Monday that the government is considering a move to increase its fiscal spending for the first quarter in a bid to give a more direct boost to the economy burdened by faltering exports.
"We're mulling some supplementary measures including an additional increase in the planned budget frontloading," Finance Minister Yoo Il-ho said in a luncheon meeting with reporters.
"Details will be announced at a later date."
The increase will add to the 125 trillion won (US$104.3 billion) already earmarked for the January-March period.
The finance ministry earlier said that it will frontload some 30 percent of its 330.6 trillion won budget for 2016 in the first quarter to preemptively cope with rising economic uncertainties at home and abroad.
Yoo, who also doubles as deputy prime minister for economic affairs, said Korea is facing daunting challenges from the start of the year as its January exports plunged more than the government had expected.
Asia's fourth-largest economy saw its outbound shipments nosedive 18.5 percent in January, marking the largest on-year fall in more than six years due to fast falling oil prices and the slowing down of China's economy.
"We had expected a weakening local currency to bolster exports, but we received a different result," said Yoo. "Export prices have decreased by a large extent and the Chinese economy tumbled in the first month."
He pointed out the Korean won has lost ground against the U.S. dollar, while it gained ground against euro and Japanese yen and aligned with the Chinese yuan.
Yoo, however, stressed that the foreign exchange rate need to be decided by the market, refuting claims that the government should take action to devalue the local currency in order to revive exports.
"The market decides the foreign currency rate without any artificial manipulation," said the finance minister. "The government can only conduct smoothing operations in case of a drastic change in the market."
The won-dollar won has widely fluctuated since January which started at 1,189.5 on Jan. 4 to peak at 1,216.5 won on Jan. 20 and fall again to 1,197.5 won as of Jan. 25. (Yonhap)
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