Ministry of Economy and Finance

Deputy Prime Minister Choi Sang-mok presided over the Ministerial Meeting on International Economic Affairs at the Government Complex-Seoul on April 25 to discuss ① response strategies to the restructuring of global supply chains, ② plans for implementing and utilizing the Indo-Pacific Economic Framework (IPEF) supply chain agreement, and ③ strategies for IPEF 2024.   The following are key messages of DPM Choi’s remarks.   In the first quarter of this year, the Korean economy grew by 1.3% compared to the previous quarter, showing a ‘clear signal’ of economic growth after a long time. Although there are some temporary factors that have driven this result, it can be viewed as a ‘textbook example of a return to growth trajectory’ for two main reasons: ① ‘private sector-led growth’ rather than relying solely on fiscal stimulus, and a ② ‘balanced economy’ driven by domestic factors such as consumption, construction, and investment in addition to a pickup in exports.   However, as the recent external economic conditions surrounding Korea remain uncertain, the government is exercising heightened vigilance over domestic and international financial markets, the real economy, and bargaining power in the global community, more so than ever before. Every ministry is exerting its utmost efforts to minimize any negative repercussions on the Korean economy. In the face of escalating uncertainty and instability in the global economy, the government will strive to establish a robust and tightly-knit supply chain to serve as a pivotal state in the global supply network.   To this end, the government will prepare pan-governmental supply chain response strategies ahead of the implementation of the Supply Chain Stabilization Act on June 27, aiming to strengthen the core capability protection system. At the same time, the government will systematically bolster its bargaining power by creating a cross-governmental platform which will allow related ministries to expeditiously respond as one-team in the event of crisis. Most importantly, concerted policy efforts from each ministry will be made to reshape the global supply chain in a direction that maximizes national interests.   Furthermore, the government will further endeavor to enhance its capacity to cope with supply chain crises in collaboration with countries in the Indo-Pacific region, including the United States and Japan. By strategically utilizing the IPEF supply chain agreement, which came into effect on April 17, the government will swiftly secure regional resources in times of supply chain crises, while engaging in various cooperation programs with resource-rich countries in the region to diversify the supply chains in advanced industrial sectors. Please refer to the attached files.

The Ministry of Economy and Finance plans to issue Korea Treasury Bonds worth approximately 15,000 billion won in May 2024 through competitive bidding.   Auction Schedule, May 2024 (Unit: KRW billion) Name Auction Notice Auction Date Settlement Date Issue Date Type Volume 2Y KTB 03250-2603 (24-3) May 2 May 8 May 9 March 10, 2024 F1 1,900 3Y KTB 03875-2612 (23-10) April 30 May 7 May 9 December 10, 2023 F 1,700 3Y KTB 03250-2706 (24-4) April 30 May 7 May 9 June 10, 2024 P2 1,200 5Y KTB 03250-2903 (24-1) May 14 May 20 May 21 March 10, 2024 F 2,300 10Y KTB 04125-3312 (23-11) May 8 May 13 May 14 December 10, 2023 F 1,600 10Y KTB 03500-3406 (24-5) May 8 May 13 May 14 June 10, 2024 P 1,100 KTBi 01625-3206 (22-6) April 29 May 3 May 7 June 10, 2022 F 50 KTBi 00000-3406 (24-6) April 29 May 3 May 7 June 10, 2024 P 50 20Y KTB 03875-4309 (23-9) May 16 May 21 May 22 September 10, 2023 F 700 30Y KTB 03250-5403 (24-2) April 25 April 29 April 30 March 10, 2024 F 3,900 50Y KTB 03500-7209 (22-12) May 7 May 10 May 13 September 10, 2022 F 500 Conversion offer Conventional May 9 May14 May 17 March 10, 2024 F 500 1.       Fungible issue 2.       Pre-issuance   * Under a fungible issue system, new KTBs issued within a specified period (three-month period for 2Y KTB, six-month period for 3Y, 5Y and 10Y KTB, one-year period for 20Y and 30Y KTB, and two-year period for KTBi and 50Y KTB) are regarded as the same KTB issue.   1) Non-competitive bids option I  For retail investors, KTBs worth 2,900 billion won (no more than 20% of the offered amount in the auction excluding 50Y KTBs) will be allocated first at the highest accepted bid rate.   2) Non-competitive bids option II  A non-competitive purchasing option II is granted to primary dealers (PD) whereby PDs can make additional purchases of 5-30%* of the accepted bid amount within three business days after the auction.   * Up to 20%p of the option is granted to the top-performing PDs, 15%p to the 2nd best-performing PDs, 10%p to the 3rd best-performing PDs, and 5%p to the rest, according to their market-making performances for the last six months. MOEF will grant additional 5-10%p to best performing PDs in the monthly evaluation.   3) Non-competitive bids option III  KTB STRIPS* are supplied on the third business day after the auctions, 221 billion won for 3Y and 5Y KTBs, 271 billion won for 10Y and 30Y KTBs, and 170 billion won for 20Y KTBs. PDs that have obtained the right to purchase these KTB STRIPS can make purchases of up to 20 billion won.   * Purchases are made in a stripped bond type, and the PDs have to meet their obligations of separating interest and principal for their purchases over the next month.   ＊Non-competitive option Ⅵ Details have yet to be decided. If non-competitive option Ⅵ needs to be implemented, the Ministry will make an announcement on May 16 with a detailed plan.   4) Conversion offer  Date KTB to be issued KTBs to be purchased Amount May 14 10:40-11:00 am 30Y KTB 03250-5403 (Maturing on March 10, 2054)   KTB 01375-2912 (19-8) KTB 01500-3012 (20-9) KTB 04750-3012 (10-7)  KTB 02375-3112 (21-11) KTB 04000-3112 (11-7) KTB 03750-3312 (13-8) KTB 03000-4212 (12-5)   KRW 500 billion * Further details will be provided on May 9 through the BOK website.      Please refer to the attached files.

On April 23, Second Vice Minister Kim Yoon-sang reviewed progress on the preparations for the launch of the Korea AeroSpace Administration (KASA) before having a meeting with related agencies, and toured the production facilities of the Korea Aerospace Industries (KAI). The visit aims to check on the direction of aerospace industry development and support policies from the government and local authorities.   VM Kim visited the temporary office of KASA in Sacheon, Gyeongsangnam-do (Gyeongnam), where remodeling work is underway (scheduled to open on May 27). After touring the site and inspecting the status of preparations related to the opening including budget, personnel, organization and office environment, he called for the successful opening of KASA without any disruptions.    The government buckles down to support the establishment of the private-led aerospace industry cluster as the National Assembly passed the special act on establishing KASA on January 9. To this end, the government prepared for the launch of KASA with this year’s budget and reserve worth $66.5 billion allocated (approved at the Cabinet Meeting on March 26) and 293 personnel to be staffed (legislated on March 29). Since March, recruitment procedures have been proceeding as well, such as demand surveys for candidates for senior government officials and foreign researchers.                          As the government and local authorities are fully committed to providing administrative support for the opening of KASA, VM Kim asked for the utmost efforts to build an innovative and leading  organization by recruiting creative experts. Furthermore, he requested all related ministries and local governments to exert their full efforts to ensure the smooth materialization of the ‘vision to build the aerospace industry cluster’ announced on March 13.   At the meeting, KAI, the Korea Aerospace Industries Association (KAIA), and the Gyeongnam Technopark Korean Aerospace Valley (KAV) requested support for manpower supply and corporate support on behalf of aerospace companies. The Ministry of Science and ICT and the Gyeongnam authority pledged that they will do their best to address the industry’s difficulties and revitalize the industrial ecosystem by fostering R&D-based human resources, providing financial support, and improving settlement conditions so that KASA can function properly as a platform for the aerospace industry.   VM Kim then visited the production facilities of KAI and emphasized the importance of KAI, which possess the largest satellite mass production process and a pool of specialized professionals, taking the lead in endeavors to establish the aerospace industry cluster in collaboration with KASA. He reiterated the aerospace industry’s role as a crucial sector in boosting national economic growth by creating new technologies and high-quality jobs. He also pledged the government’s continuous support by injecting a total of 600 billion won in the establishment of the cluster by 2031, as part of efforts to revitalize future industries and dynamic economic growth in Korea. Please refer to the attached files.