On September 30, Deputy Prime Minister and Minister of Finance and Economy (MOFE) Lee Hyoung Il chaired an Expanded Macroeconomic, Fiscal and Financial Meeting at the Government Complex Seoul, attended by Minister of Planning and Budget (MPB) Park Hong Keun, Financial Services Commission (FSC) Chairman Lee Eog Weon, and Bank of Korea (BOK) Governor Shin Hyun Song. The participants discussed recent major issues concerning the macroeconomy, fiscal policy and financial markets.
The meeting was the first Macroeconomic, Fiscal and Financial Meeting held since Deputy Prime Minister Lee took office. Held following the BOK’s recent policy rate hike and ahead of the National Assembly’s deliberations on next year’s budget proposal, the meeting brought together the authorities responsible for fiscal, monetary and financial policies to assess macroeconomic and financial market conditions and discuss policy responses going forward.
The participants first noted that economic indicators, including exports and investment, have remained strong, contributing to stronger growth momentum. At the same time, external uncertainties remain elevated due to factors such as rising interest rates in major economies and geopolitical risks, while pressures on people’s livelihoods persist at home. They also shared the view that structural challenges facing the Korean economy, including deepening polarization, remain to be addressed.
They shared the view that fiscal and monetary policies can complement each other when fiscal policy is directed toward supporting vulnerable groups and fostering future growth engines to strengthen the economy’s growth potential. They also expected that such an approach could, over the medium to long term, help raise the potential growth rate and ease inflationary pressures.
Regarding the revised tax revenue forecast for this year announced today, the participants noted that the accelerating economic recovery, supported by strong semiconductor performance and other factors, is anticipated to generate KRW 63.2 trillion in additional tax revenue relative to the amount reflected in the previous supplementary budget. They agreed that these additional revenues should be used strategically, taking into account overall economic conditions. In particular, there was consensus that the additional tax revenue should be directed toward three key areas of social policy closely related to people’s daily lives – housing, employment and financial support for low- and middle-income households – so that the rapid economic recovery translates into greater stability in people’s livelihoods, while serving as a catalyst for reducing economic polarization.
Turning to recent financial market developments, the participants assessed that domestic bond yields have continued to rise amid higher global interest rates resulting from factors such as rising oil prices and shifts toward monetary policy tightening in major economies, combined with domestic factors. Against this backdrop, they agreed to closely monitor developments in the government bond market and take necessary market stabilization measures, including emergency buybacks and reductions in government bond issuance using a portion of the additional tax revenue.
The participants will maintain frequent communication on macroeconomic, fiscal and financial issues and further enhance cooperation among the relevant authorities to ensure the coherent implementation of their respective policies.
Please refer to the attached files.
