Kim Dong-yeon: "Economic Recovery Efforts Required While Adjusting Interest Rate Hike Speed and Extent"

[Suwon Ilbo=Park No-hun Reporter] Gyeonggi Province Governor Kim Dong-yeon called for comprehensive national governance reform and renewal.

On the 25th, Governor Kim Dong-yeon stated through SNS, "After hearing the President's policy address today, I'm concerned about how many citizens will have trust and confidence to overcome the current economic crisis," and diagnosed that "the current economic crisis is a complex economic crisis stemming from hegemony, protectionism, and the transition of economic paradigms."

He then presented three policy directions: 'people-centered fiscal policy' rather than 'sound finances', 'swift and decisive measures', and 'adjusting the pace and extent of interest rate hikes'.

Governor Kim stated, "Current politics and leadership are not about integration and trust, but fear and division," and added, "If we fail to establish proper leadership, it will trigger a domino effect of economic fear and livelihood concerns. This is the time to cooperate with opposition parties and resolve the economic crisis through dialogue and compromise."

The following is Governor Kim Dong-yeon's full SNS statement.

<Urging Comprehensive National Governance Reform and Renewal>
After hearing the President's policy address today, I am concerned about how many citizens will gain trust and confidence to overcome the current economic crisis.
Government awareness remains complacent and confused.
If we continue on this path, there is a significant risk of missing the opportunity.
The current economic difficulties are of a different dimension from the foreign exchange crisis or the global financial crisis of the past. It is a complex economic crisis arising from hegemony, protectionism, and the transition of economic paradigms. It will not end in the short term.
In such circumstances, the frequency of mentions of economy and welfare in a policy address is not what matters. Proper direction-setting and alternatives are important.
Our economy needs a contingency plan to address crisis situations.
A transformation of three policy directions is necessary.
First, what is needed now is 'people-centered fiscal policy', not 'sound finances'.
The economy will face greater difficulties next year. Supplementary budget compilation will be inevitable. We must spend money properly now to reduce supplementary budget needs.
We cannot take stones from below to prop up stones above.
We must restore budgets for local love gift certificates, public rental housing, and senior employment programs.
Second, swift and decisive measures are necessary.
In 2008, as the Presidential Chief Secretariat for Economic and Financial Affairs, I overcame the economic crisis guided by three principles: 'bold, swift, and sufficient'.
Bold-scale liquidity provision to small and medium enterprises and small business owners is necessary.
With emergency measures investing 50 trillion won in bond market liquidity, we may have extinguished the immediate fire, but more difficulties are expected including additional U.S. federal funds rate hikes and concerns about defaults in real estate PF loans.
We must supply liquidity exceeding 100 trillion won through credit guarantee fund expansion and other means. During the most difficult times, we must provide substantive solutions to the most struggling enterprises and households.
Third, the pace and extent of interest rate hikes must be adjusted.
As of end of June this year, the total debt of households and enterprises is 4,700 trillion won.
While interest rate hikes are unavoidable to some extent, household and enterprise debt could become a powder keg.
If interest rates rise sharply and household and enterprise debt becomes non-performing, real economic recovery becomes difficult and capital outflows abroad will accelerate.
This is the time to adjust the pace and extent of interest rate hikes while making efforts to recover the real economy.
Economy is about psychology. And trust is at the heart of psychology.
It is a grave matter if trust in markets and government policy collapses.
A concrete example is the Gangwon Legoland incident.
The involvement of politicians who do not understand economics has damaged market trust and magnified the economic crisis—a harmful measure.
The essence of our crisis is not economy but 'political crisis' and 'leadership crisis'.
Current politics and leadership are not about integration and trust, but fear and division. If we fail to break with such politics and establish proper leadership, it will trigger a domino effect of economic fear and livelihood concerns.
This is the time to cooperate with opposition parties and resolve the economic crisis through dialogue and compromise.
I urge the President and government to pursue comprehensive national governance reform and renewal.