Ministry of Economy and Finance

Deputy Prime Minister Choi Sang-mok convened the second Advisory Meeting on International Economic Affairs at the Government Complex-Seoul on April 23 to discuss the outlook for the Middle East tension and its potential impact on the Korean economy with the Middle East and energy experts.   With an aim to seek strategic countermeasures against the rapidly escalating global uncertainties, the Advisory Meeting on International Economic Affairs was introduced in 2024 as an ad hoc committee to gather insights from domestic and international experts and incorporate their views into policies. This second meeting delved into an in-depth review of the future trajectory of the Middle East conflict.   DPM Choi emphasized that the recent tension between Israel and Iran has led to an unprecedented level of uncertainties in the global political and economic environment; under the circumstance, it is crucial to keep watch on the implications of Middle East risks on the Korean economy and be prepared to respond promptly.   Experts who attended the meeting viewed that the direct confrontation between Israel and Hamas has occurred amidst their long-lasting conflict, posing a great unpredictability to the global economy, and  stressed the importance of a meticulous monitoring on the developments of the situation and their potential spillovers.   As the meeting concluded, DPM Choi proposed the experts to continue communication with the government on the geopolitical issue, while reiterating the commitment of the entire government to provide intensive countermeasures to prevent any adverse impact on the Korean economy by carrying out a thorough review on the progress of the Middle East tension and financial market trends, as pointed out by the experts. Please refer to the attached files. 

Deputy Prime Minister Choi Sang-mok attended the World Bank Development Committee Meeting in Washington D.C. on April 19. On the sidelines of the meeting, he had talks with the World Bank (WB) President Ajay Banga, the Minister of Finance of Ukraine Sergii Marchenko, Global Head of S&P, and signed an agreement on the Poverty Reduction and Growth Trust (PRGT) with the International Monetary Fund (IMF).     1. The World Bank Development Committee Meeting   The WB has presented the ‘From Vision to Impact : Implementing the World Bank Group Evolution’ which contains the efficient operation model and measures to expand financial capacity with the goal of becoming a “Better and Bigger Bank”.   In response, DPM Choi emphasized three points for the effective implementation of the WB Evolution Roadmap.   First, underscoring the importance of securing financial capacity to become a “Bigger” bank, he proposed increasing the mobilization of private capital and expanding co-financing with various development partners, including Korea’s Economic Development Cooperation Fund (EDCF)[1].   Second, he emphasized the need to promote digitization to achieve a “Better” bank; he called on the WB not only to digitize the way it operates but also to actively back up the digital transformation of developing countries.   Third, he stressed the importance of continuing support for low-income countries, as well as addressing global challenges. To this end, he called for cooperation among donor countries, recipient countries, and the WB for the 21st replenishment of the International Development Association (IDA)[2] and developing a sustainable financing roadmap for the IDA. Not only that, he proposed hosting the Final Meeting of the IDA21 replenishment in Korea in December.                                                                                                              The final IDA replenishment meeting is an important gathering where the scale of replenishment and the participation of member states are determined, serving as a great opportunity for Korea to demonstrate its determination to bolster contribution as a global pivotal state to the international community’s solidarity for supporting low-income economies.     2. Outcomes of talks with WB President   Prior to the WB Development Committee Meeting, DPM Choi met with the WB President Ajay Banga on April 18.   During their meeting, DPM Choi and President Banga agreed to closely work together to scale up co-financing between the WB and the EDCF[3], recognizing the contribution of the co-financing to the financial capacity to enable the WB’s evolution roadmap to be implemented.   In addition, President Banga welcomed DPM Choi’s proposal to host the final replenishment meeting of IDA21 in Korea, which has transformed from an IDA recipient to a donor.   Last but not least, DPM Choi conveyed a signed Instrument of Contribution to contribute $50 million to the WB’s Special Program for Ukraine and Moldova Recovery (SPUR) to President Banga. President Banga expressed gratitude for Korea’s support and showed expectations for Korea’s active role in Ukraine’s recovery and reconstruction projects.     3. Outcomes of the meeting with the Minister of Finance of Ukraine   DPM Choi met with the Minister of Finance of Ukraine Sergii Marchenko to conduct the signing ceremony for the framework agreement (F/A) of the EDCF and discuss ways to enhance economic ties between the two countries in relation to Ukraine’s reconstruction and development going forward.                                                                                                     Above all, DPM Choi conveyed his deep condolences to the victims of the war that has persisted over the past two years. Noting that Ukraine’s economic growth of 5.3% last year demonstrates the  country’s resilience, he emphasized the need to strengthen cooperation between the two countries so that Ukraine can overcome the ravages of war successfully just as Korea did in the past.   DPM Choi particularly expressed his anticipation for further development in bilateral economic ties, spurred by the $2.3 billion Ukraine support package announced by President Yoon Suk Yeol during the G20 summit last September. Especially, with a legal basis for medium to long-term concessional assistance established through the signing for the EDCF F/A, both sides agreed on exploring EDCF projects together, which could significantly contribute to the reconstruction and development of Ukraine. Furthermore, DPM Choi asked for the Ukrainian government’s attention and support to ensure that Korean companies with rich development experience, excellent competitiveness, and advanced technology can actively engage in and play a pivotal role in the Ukraine’s recovery.         4. Meeting with S&P Global Head   Deputy Prime Minister Choi held a meeting with Roberto Sifon-Arevalo, Global Head of Sovereign Ratings at the global credit rating agency Standard & Poor’s (S&P).   At the meeting, DPM Choi explained the recent economic trends in Korea and stressed the government’s efforts for people’s livelihood recovery, including achieving price stability, as well as key economic policy directions focusing on achieving a dynamic economy. Moreover, he showed his determination for the consistent pursuit of policy tasks such as Corporate Value-up, fiscal soundness, and structural reforms.   Responding that such endeavors would be helpful for future assessments of the Korean economy, the Global Head Sifon-Arevalo showed a keen interest in Korea’s policies aimed at improving the country’s potential growth rate.     5. IMF PRGT Contribution Agreement Signing Ceremony   Lastly, DPM Choi signed the agreement for the IMF’s PRGT with Managing Director of the IMF Kristalina Gerogieva.   Through this agreement, Korea will contribute a total of 41.4 million SDR (equivalent to $55.96 million) over the period of 2024 to 2027, and the contributed funds will be used for the purpose of poverty eradication in low-income economies. DPM Choi extended congratulations to Managing Director Georgieva, who has been confirmed to serve a second term until 2029, and asked for continued efforts in poverty eradication and growth support for low-income countries during her new term. [1] A long-term, low-interest concessional loan from the Korean government to developing countries, aiming to support their economic development. [2] IDA provides long-term, interest-free funds to low-income countries to boost their economic development. Regular replenishment of funds is conducted every three years to secure contributions and the IDA-21 period spans from July 2025 to June 2028. [3] The EDCF and the WB each provide loans for joint projects, with a limit of $300 million during the period from October 2022 to October 2025. Please refer to the attached files. 

On April 19, Deputy Prime Minister Choi Sang-mok, held an emergency meeting to review international economic conditions via video conference with key officials from the Ministry of Economy and Finance during his trip to Washington, D.C., aiming to check on the recent developments in the Middle East conflict and discuss sector-specific response plans.   With major foreign media outlets reporting Israel’s retaliatory attack on facilities in Iran, DPM Choi emphasized the heightened uncertainty of the situation during the meeting where he received real-time updates on the conflict and trends in financial markets and related sectors at home and abroad.   First and foremost, DPM Choi stressed the need to strengthen the government’s cross-ministerial emergency response system with a higher level of vigilance than ever before to ensure that the recent incident does not have a negative impact on the Korean Economy.   Although no direct disruptions in sectors such as energy, trade, supply chains, and maritime logistics were observed up to this point, DPM Choi requested that the joint emergency response team among agencies continue to operate throughout the weekend to keep a close watch on the situation while directing each ministry to enhance their sector-specific emergency response teams to cope with more intensively in accordance with the evolving situation.   As for the financial sector, he also called for concerted efforts from the relevant agencies to conduct real-time monitoring of market trends and immediate actions to be made on the back of the ongoing 94 trillion won market stabilization program when necessary. In terms of the foreign exchange market, he asked for prompt and resolute measures against excessive market fluctuations that deviate from the country’s economic fundamentals. Please refer to the attached files.