Choi Sang-mok "Stress DSR Phase 2 to be Implemented Smoothly in September"

Speech at the 'Global Financial Society' Policy Symposium on the 11th
"Efficiency in Fiscal Spending More Important Than Tax Increase"
"Support for Small Business Owners Should Be Customized"

Choi Sang-mok, Deputy Prime Minister for Economic Affairs and Minister of Economy and Finance, attended the Global Finance Society Policy Symposium held at the Korea Federation of Banks in Jung-gu, Seoul on the 11th, delivering a lecture on the theme "Realizing an Era of Ordinary People and the Middle Class through a Dynamic Economy." Photo by Jo Yong-jun jun21@

Choi Sang-mok, Deputy Prime Minister for Economic Affairs and Minister of Economy and Finance, stated on the 11th, "We will implement the second phase of the stress DSR (Debt Service Ratio) scheduled for September without any setbacks this time." This remark was made in response to growing public criticism that delaying the implementation of the stress DSR phase 2 from July to September has stimulated the increase in mortgage loans, as well as concerns about inconsistencies in household debt measures.

On the same day, at the 'Global Finance Society' policy symposium held at the Bankers Hall in Jung-gu, Seoul, Deputy Prime Minister Choi said, "There are many concerns about the recent increase in mortgage loans, but the ratio of household debt to GDP (Gross Domestic Product) has decreased for two consecutive years and remains at a manageable level." He added, "We will continuously monitor the increase in household debt to ensure financial stability." He emphasized, "Through the weekly F4 meetings (attended by the Financial Services Commission Chairman, Minister of Economy and Finance, Governor of the Bank of Korea, and Financial Supervisory Service Chairman), the heads of institutions share their understanding and build trust. Please believe that we are doing our best to understand the economic situation."

He also explained that the corporate tax situation this year is not favorable. Deputy Prime Minister Choi said, "Samsung Electronics and SK Hynix, which struggled last year, are doing better this year, but corporate tax is influenced by last year's performance." He added, "This means there is significant volatility; until last year, it was a crisis situation, but this year we are moving out of it."

He stressed that to enhance fiscal sustainability, the focus will be on efficient management of fiscal expenditures rather than tax increases. He explained, "Securing a stable tax base and effectively managing fiscal expenditures take priority over raising taxes." Deputy Prime Minister Choi elaborated, "Many countries face issues with fiscal sustainability, but the common opinion is that tax increases have more negative than positive effects on private activities. It is important to normalize the outdated tax system, promote economic vitality, and ensure welfare spending for the socially vulnerable."

Regarding support for small business owners included in the 'Dynamic Economy Roadmap' announced last week, he explained that tailored support will be strengthened. Deputy Prime Minister Choi said, "Instead of uniformly extending loan maturities or allowing installment repayments for all small business owners and self-employed as in the past, I believe indirect support such as electricity bill subsidies should be mobilized to provide customized assistance to individuals."

On the topic of 'value-up' in the Korean stock market, he mentioned, "Everyone shares the awareness that corporate governance is the most important," and added, "Separately from general inheritance tax, we intend to make the tax system an incentive in the value-up area," referring to considerations for tax support measures.

Deputy Prime Minister Choi also highlighted the importance of increasing the economic activity participation rate to enhance growth potential. He said, "Since 2015, the overall economic activity participation rate has risen, but the participation rate among people with children has dropped significantly," emphasizing, "Structural changes are needed to improve quality of life so that people can balance work and family while increasing economic activity participation."

This content was produced with the assistance of AI translation services.