President Lee Jae-myung officially appointed Lee Hyung-il as Deputy Prime Minister and Minister of Finance and Economy on September 22, marking the launch of the second economic team under the Lee Jae-myung administration. With major economic issues such as U.S. investment execution, a revised revenue forecast set to be announced at the end of the month, and tax law reviews in the upcoming regular National Assembly session, the new economic leader's ability to coordinate policies will be put to the test.
Lee began his duties without a formal inauguration ceremony, delivering his inaugural address via internal broadcast. His first official engagement involved reporting on U.S. investment matters to the National Assembly's Finance and Economy Committee. He is expected to depart soon to accompany President Lee Jae-myung on a trip to the United States.
One of the immediate challenges facing Lee is U.S. investment. The government is coordinating specific project selections and investment conditions related to strategic investments between South Korea and the U.S. The Ministry of Finance and Economy is working with relevant ministries, including the Ministry of Trade, Industry and Energy, to secure investment funding while managing the impact of large overseas remittances on the foreign exchange market. Balancing the speed of investment execution with the stability of domestic financial and foreign exchange markets is a key task.
The revised revenue forecast and its implications for fiscal management are also significant variables. The government plans to recalculate this year's revenue conditions by the end of the month. If this year's revenue exceeds initial projections, coordination with the Ministry of Economy and Finance will be necessary regarding how to utilize the surplus.
Previously, the government decided to establish a Future Response Fund worth 162.3 trillion won in the 2027 budget, utilizing additional revenue that exceeds domestic tax trends. Of this, 45.4 trillion won will be allocated to actual projects in four areas: youth, growth drivers, local development, and education, while 12.5 trillion won will be used to reduce new bond issuances.
Depending on the results of the revenue recalculation, the size of the fund and fiscal capacity may change, leading to potential policy adjustments on whether to allocate surplus revenue for enhancing growth drivers and supporting youth or for managing national debt.
The upcoming discussions in the regular National Assembly session regarding real estate tax reform will also serve as a test of Lee's policy coordination skills. The government is pursuing a plan to differentiate tax burdens primarily for homeowners with one residence. During his candidacy, Lee stated, "Establishing a housing market centered on residence is a certain direction the government envisions."
However, whether it is appropriate to uniformly increase tax burdens on non-resident homeowners facing difficulties in actual residence may become a contentious issue during the National Assembly discussions. The issue of non-resident homeowners was a major point of contention during the confirmation hearing.
Additionally, the government must address the recovery of the domestic economy and inflation. It is essential to implement large-scale foreign investments and growth policies while stabilizing living costs for agricultural products and petroleum, and linking these policies to the recovery of consumption and small businesses.
In his inaugural address, Lee emphasized the importance of both economic growth and stability for people's livelihoods. He stated, "Economic growth cannot be felt through numbers alone," and pledged to work diligently to raise the potential growth rate of the economy and ensure that the benefits of growth are evenly distributed among the populace.
He added, "Above all, price stability is fundamental to the livelihood economy and the starting point for alleviating polarization," and committed to paying closer attention to issues that directly affect the lives of citizens.
* This article has been translated by AI.
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