Yoo Il-ho, the ruling party lawmaker chosen by President Park Geun-hye to occupy the finance post, said there were similar warning signs now to those before the 1997-1998 financial crisis, although the country’s current problems were less than they were two decades ago.
He faces a challenging task of reviving faltering economic growth as exports continue to slow amid cooling demand from China, while domestic spending has been held back by high household debt.
“We are talking about a crisis now because it is time to take some pre-emptive measures such as passing the bills on economic revitalisation and structural reforms,” Mr Yoo said.
“Structural reforms have not been completed yet and they will be our top priority,” he added, but did not elaborate on specifics.
The 60 year-old Mr Yoo, a confidant of Ms Park, is expected to use his experience as a two-term lawmaker to push through controversial legislation stuck in parliament for months, such as labour reform bills.
He was chosen to replace Choi Kyoung-hwan as finance minister in a partial cabinet shake-up involving the departure of five ministers planning to run for next year’s parliamentary election.
Mr Yoo, a lawmaker from the ruling Saenuri party, was until November the country’s transportation minister. He is also a scholar-turned politician, who worked for state-run research houses such as Korea Development Institute and the Korea Institute of Public Finance for two decades.
“He is the right person to pursue economic revitalisation by successfully carrying out the government economic policy,” said Kim Sung-woo, the presidential press secretary, pointing to Mr Yoo’s “abundant insight in economic policy and real economy”.
Mr Yoo, a public finance expert, is expected to step up efforts to use government spending to kick-start the economy, which is forecast to grow 3.1 per cent in 2016 after an estimated 2.7 per cent expansion this year.
The country’s 2016 budget, which was drawn up by Mr Choi, his predecessor, is already forecast to raise government debt above 40 per cent of gross domestic product for the first time.
While some analysts praised Mr Choi’s efforts to boost economic growth through expansionary fiscal policy, the outgoing minister had recently been plagued by allegations that he abused his political power to get his intern a job at a state-run institution. He has denied the allegations.
Ms Park also appointed an engineering professor at the country’s top school, Seoul National University, as the new education minister and the vice-finance minister as the new commerce minister. She replaced two other ministers for internal administrative affairs and women’s affairs.
The reshuffle was widely expected, because of the need to make the outgoing ministers eligible for parliamentary posts — government officials running for the parliamentary election must step down 90 days before the election, set for April.
Mr Yoo will officially take over from Mr Choi, who has held the post for about 18 months, early next year. His nomination requires a parliamentary confirmation hearing but is not subject to parliamentary approval.
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