[Q&A] Hong Nam-gi "COVID-19, Impact on Growth Rate and Tax Revenue... Need to Monitor Declining Tax Income"

Emergency Economic Meeting to Be Held Weekly... Bank of Korea Governor Also Attending Today

[Image source=Yonhap News]

[Asia Economy Reporter Jang Sehee] Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, said, "The economic growth rate and revenue are expected to be affected depending on the impact of the novel coronavirus infection (COVID-19) and the speed of recovery."

After concluding the 1st Emergency Economic Meeting chaired by President Moon Jae-in on the 19th, Deputy Prime Minister Hong held a briefing and stated, "I believe it is necessary to observe the tax revenue." He added, "We also plan to concurrently carry out efforts to restore economic recovery and vitality, such as boosting consumption and revitalizing exports and investment."

The following is a Q&A with Deputy Prime Minister Hong

▲ To what extent are you considering the size of the Bond Market Stabilization Fund and the Securities Market Stabilization Fund? Are you considering additional measures related to large corporations?

= The Bond Market Stabilization Fund and the Securities Market Stabilization Fund will be reviewed in detail, including specific situations and execution plans, and we plan to announce them as early as next week. Today, since the financial market response focused on small and medium-sized enterprises, small business owners, and self-employed individuals, I spoke mostly about these areas. The liquidity supply from financial institutions to large corporations and support for companies are being handled separately. We plan to strengthen measures related to large corporations going forward.

▲ Do you see any problem with the national debt ratio exceeding 40% of GDP? How do you plan to cover the reduced supplementary budget size of about 80 billion won?

= During the first supplementary budget, the supplementary revenue adjustment for tax revenue preservation was excluded and shifted to only essential submissions. Depending on the economic growth forecast due to COVID-19 and the overall speed of economic recovery, there will likely be an impact on revenue as well. Regarding revenue, the timing of the end of the COVID-19 situation, its impact on our economy, and the speed of overcoming the economic crisis will collectively affect tax revenue, so I think it is necessary to observe tax revenue a bit more. If necessary, I believe we should also prepare countermeasures for tax revenue.

▲ How will the Emergency Economic Meeting be operated?

= The Emergency Economic Meeting is chaired by the President, and usually about six members of the cabinet attend. Including myself, the Minister of Trade, Industry and Energy, the Minister of Employment and Labor, the Minister of SMEs and Startups, the Director of the Office for Government Policy Coordination, and the Chairman of the Financial Services Commission attend regularly. The Chief of Staff and senior secretaries from the Presidential Secretariat also attend, and when necessary, relevant ministers, the Vice Chairman of the National Economic Advisory Council, the Chairman of the Policy Planning Committee, and chairpersons of international committees attend. Additionally, the Governor of the Bank of Korea, heads of economic organizations, chairpersons of the two major labor unions, heads of research institutes, and private experts may attend as needed. The meeting is held regularly about once a week. At today's first meeting, the fixed attendees including myself and the Governor of the Bank of Korea participated. The previously held Economic Vitality Measures Meeting has been renamed the Crisis Management Measures Meeting, and it will discuss agendas to overcome the economic crisis.

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