Published : Nov. 6, 2016 - 15:24
The uncertain future of the Korean government’s economic team is adding downside risks to the country, which is bracing for imminent headwinds.
President Park Geun-hye on Wednesday hurriedly named Chairman of the Financial Services Commission Yim Jong-yong as the new deputy prime minister and finance minister, along with the appointment of a new prime minister, in an attempt to divert public anger over the Choi Soon-sil scandal.
While Finance Minister Yoo Il-ho (left) presides over an economy-related ministers' meeting in Seoul, Thursday, Financial Services Commission Chairman Yim Jong-yong (right) participates in the meeting. (Yonhap)
However, it is unclear whether Yim will be able to take the helm of the Finance Ministry any time soon, since the appointments -- particularly of the prime minister -- have sparked strong public backlash, with opposition parties vowing to boycott all parliamentary hearings.
While the designation of respected technocrat Yim to the post was generally well-received, his appointment could also suffer a setback as the opposition parties remain adamantly against Prime Minister-designate Kim Byong-joon, citing the unilateral appointment process.
If the Assembly continues to refuse to hold hearings, the president can, by law, push ahead with the appointment one month after requesting hearings with the parliament. But with Park under pressure from the public to step down -- she holds a record-low approval rating of 5 percent -- it remains questionable whether she will be able to push through with the nominations of Yim and Kim.
As of now, outgoing minister Yoo Il-ho maintains his post, and has presided over key meetings including the government’s announcement of anti-speculation measures last Thursday.
Following the replacement of the minister, the Finance Ministry is also expected to undergo changes of its first and second vice ministers.
Aware of the confusion, Yim had urged the ministry last week to “take great care so as not to hurt the continuity of the ministry’s operation.”
Toward the end of this year, the Finance Ministry has to draw up the big picture for the economic policy of next year. However, ministry officials are not sure who -- the incumbent Yoo or nominee Yim -- will oversee it.
The parliamentary review of the 400 trillion-won ($350 billion) budget for next year has so far been put on the back burner, as parliamentary discussions are engrossed with the presidential scandal.
“We plan to report current affairs at the ministry to both the incumbent Deputy Prime Minister Yoo and the nominee Yim,” an official at the Finance Ministry was quoted by Yonhap as saying.
At the FSC, Yim has been pushing for faster corporate restructuring at ailing industries such as shipbuilding, shipping and steelmaking, as well as countermeasures to deal with the growing household debt.
The FSC might lose power in dealing with issues of corporate restructuring and household debt, if uncertainties over its leadership are prolonged, industry watchers warned.
Yim had said he would seek “timely measures” to deal with household debt, admitting that easier access to mortgage loans since August 2014 has led to faster growth of household debt.
The nominee for new FSC chief has not been announced yet. If Yim takes office at the Finance Ministry and FSC’s leadership remains vacant, FSC Vice Chairman Jeong Eun-bo is likely to replace Yim, according to industry observers.
The external risks faced by Korea include repercussions from the US presidential election Tuesday, a possible rate hike at the Federal Reserve within this year and uncertainties over Brexit.
Instabilities on home ground include a possible delay of the National Assembly’s passage of the 2017 national budget, ongoing corporate restructuring and rising household debt.
Early this week, Yim and high-ranking officials of the FSC, the Financial Supervisory Service and Korea Exchange will hold an emergency meeting on the local market, industry sources said.
By Kim Yoon-mi (
yoonmi@heraldcorp.com)