Connect to share and comment
SEJONG, March 22 (Yonhap) -- South Korea's economic policymaking has been almost paralyzed for more than a month due to a political showdown over the government reorganization bill, raising jitters that the country could fall behind its rivals in combating the global economic crisis, experts said Friday.
After a near-two-month impasse, the ruling and opposition parties passed the bill earlier in the day, but the deadlock has prevented the finance ministry in charge of running Asia's fourth-largest economy from functioning properly as the minister nominee was unable to take office.
The controversial bill stipulates that the finance minister double as the deputy prime minister for economic affairs, giving the ministry the status as a de facto economic policy "control tower."
On Feb. 17, President Park nominated Hyun Oh-seok, the head of a state-run think tank, to lead the finance ministry, but his official inauguration had to be delayed amid the prolonged political bickering.
With the weeks-long vacancy at the top of the ministry, other high-ranking officials have also left for other positions in line with the personnel shake-up underway at government agencies and ministries that are not subject to the pending reorganization bill.
Two vice finance minister positions remain vacant as one left for the prime minister office and the other went to serve as the head of the Financial Services Commission, the country's financial watchdog. Two first-grade policymakers in charge of macroeconomic and tax affairs offices also left for their new jobs.
Currently, five out of 10 first-grade or higher-ranking posts remain vacant, according to the ministry. Though the day-to-day decisions are made by the outgoing minister Bahk Jae-wan, many worry that it would be impossible for him to push for any major policy actions while his replacement is waiting to take over.
President Park is pushing to turn the finance ministry into an organization led by the vice prime minster, signaling that her focus is to revitalize the slumping economy and stabilize the livelihoods of people by creating more jobs and balancing consumer prices. The ministry covers almost all economic affairs, including finance, fiscal spending, taxation and the budget.
"Despite vacancies in such important jobs, their work and responsibilities can be replaced by their immediate subordinates in the short term. But the problem is how long it could continue given that timing is of essence when it comes to economic policies," said Lim Hee-jung, an economist at the Hyundai Research Institute.
He noted that the reason why the government forecast that the Korean economy will grow faster in the second half is because of the rebounding U.S. economy, which is now showing signs of picking up. Chances are high that the Chinese economy is also making a soft landing.
"Against this backdrop, the sense of urgency is growing for the government to come up with effective measures in a timely manner to capitalize on the growing momentum in the global market," he added.
The vacuum in major policymaking posts of the ministry was epitomized by the cancellation of the anti-inflation meeting scheduled to be held on Friday. The meeting is a major communication channel for the government to discuss ways to keep inflation under control.
South Korea's consumer prices remain relatively stable in recent months, but policymakers have expressed concerns that the stable trend could be disrupted any time as many negative factors are still lingering. High food and service costs especially remain a drag on the livelihoods of low- and middle-income earners.
Another critical issue is whether to draft an additional budget aimed at resuscitating the economy.
During his confirmation hearing last week, Finance Minster nominee Hyun hinted that he will push for additional spending, including other diverse stimulus measures. Government sources recently confirmed that they are seeking to craft an extra budget worth about 10 trillion won (US$8.96 billion).
All of those measures under consideration, however, could be put on hold until the finance minster post and other major high-ranking positions are filled, experts worried.
"Let's take the extra budget issue as an example," a market watcher said. "It surely needs time to be discussed by lawmakers and policymakers before a final decision is made. Even if the budget proposal is finalized, there will be a time lag until it actually has an impact on the economy. Having said that, the sooner, the better when it comes to such polices.
"It seems that political factors are affecting the economic process more and more, especially when the world's economy is undergoing a crisis," he said. "Still, it is unfortunate that things are mired here in a political stalemate when we have to work hard to keep our economy going."
<All rights reserved by Yonhap News Agency>