SEOUL (Reuters) - South Korea’s finance minister-nominee said on Sunday fiscal policy should play a more active role in economic management in order to tackle low economic growth and soaring youth unemployment.
Speaking hours after his nomination by President Moon Jae-in, Kim Dong-yeon, who has spent more than a decade at the nation’s budget office, said his team would draft a supplementary budget after his official appointment.
Kim said youth unemployment, running as high as 23 percent according to some estimates, warranted an extra budget for Asia’s fourth largest economy. Official figures show youth unemployment at 11.2 percent in April.
If the current trend of unemployment continued, Kim told reporters, “it will threaten potential growth so the current situation warrants a more active fiscal policy.” He did not elaborate on the amount of the extra budget.
During an election campaign President Moon had pledged a 10 trillion won ($8.96 billion) extra budget before the end of the year, to sit on top of a 400.5 trillion won budget for 2017 approved by parliament last year.
Kim, who will double as deputy prime minister for economy, will become President Moon Jae-in’s first finance chief. Aside from high unemployment, he faces other pressing economic challenges including swelling household debt and increasing demand for welfare.
But despite calling for an expansionary fiscal policy, Kim said spending increases would be below 7 percent a year.
“Seven percent increase (a year) would be too hasty,” he said,
Separately, Kim also said he will try to extend a bilateral currency swap deal with China which expires in October.
“Currency swaps aren’t the only safety nets and hence we will try to comprehensively consider other measures. But it seems necessary to extend the currency swap to cement existing financial safety nets,” Kim said.
President Moon does not need parliamentary approval to appoint a finance minister, but Kim needs to attend a hearing at the National Assembly.
($1 = 1,116.6100 won)
Reporting by Cynthia Kim and Shin-hyung Lee; Editing by Clelia Oziel