SEOUL, March 13 (Yonhap) -- President Park Geun-hye's nominee for the finance ministry chief said Wednesday that the government needs to review diverse measures including fiscal and financial steps to stimulate the economy which remains in a "serious" condition.
During a parliamentary confirmation hearing held in Seoul, Hyun Oh-seok also opposed raising tax rates in order to secure the necessary money for an expected increase in welfare spending during the five-year term of President Park.
"I agree that the economy is facing serious situations," Hyun, 62, told lawmakers during the hearing. "There are many policy packages available. It is necessary to review comprehensive measures."
"Our economy needs to be stimulated through fiscal and financial measures, though the government has to be careful in choosing what type of action it will take," he added.
The remarks come as part of an answer to a question about whether the government is willing to draw up an additional budget to stimulate the economy. He stopped short of providing direct answers.
Instead, Hyun, who will also serve as vice prime minister in charge of economic affairs, said in his keynote speech that the government will work hard to let its fiscal side play by the "appropriate" roles in response to the slowing economic growth.
Calls for additional government spending are getting louder as the economy is running into cloudy outlooks amid a global slump and its negative impact on the country's export-dependent growth. The Korean economy expanded 2 percent last year, the slowest gain in three years.
The government earlier revised down its growth outlook for this year from 4 percent to 3 percent. Experts worry that it could further slow to the 2-percent range given the current economic conditions at home and abroad.
Hyun admitted that the economy has been in an "unprecedented" low-growth mode in recent years, saying that policy should be pursued not just to stimulate its growth for the short term but also to boost the country's long-term growth potential.
The confirmation hearing comes a day before the Bank of Korea holds a monetary policy-setting meeting. Hyun said that he surely recognizes its independence but expressed optimism for policy cooperation down the road in boosting the economy as the government and the central bank seem to have similar views of the current conditions.
When asked about whether the government can secure money for expanded welfare programs without hiking tax rates, Hyun said that it can be achieved by reforming the current spending structure and streamlining tax codes in a way that results in more revenue.
Experts say that the new government needs about 27 trillion won (US$24.6 billion) every year during its five-year term to carry out the welfare programs promised by Park, which includes free child care and subsides for college tuition.
"We need to draw up measures on both spending and tax income aspects," the nominee said. "I think it is not impossible (to finance those programs without raising tax rates) by reforming the spending structure and expanding the income base through regularizing the underground economy and streamlining tax deduction and exemption programs."
Meanwhile, Hyun, who has served as the head of the state-run research organization for the past three years, was grilled over his position on "economic democratization," with some lawmakers pointing to his alleged tendency to put more emphasis on growth and his previous remarks suggesting that he opposes toughening regulations on large conglomerates.
Economic democratization is a major campaign pledge of President Park, which is intended to reduce the concentration of economic power in the hands of conglomerates and strengthening regulations meant to ensure fair business practices.
"My belief is that we have to pursue a new economic paradigm where fair competition can be possible based on economic democratization," Hyun said. "I think I have balanced views in that regard."
All rights reserved by Yonhap News Agency