Lee Chang-yong, the governor of the Central Bank of Korea, stated regarding the call for the establishment of a supplementary budget following the state of emergency, "While the views of the two parties on fiscal policy differ, mentioning a fiscal stimulus could be viewed as politically biased, but I could not remain silent as the Central Bank governor."
The governor said during the Foreign Policy Association (FPA) awards ceremony held in New York on the 21st (local time), after receiving the "FPA Medal," that he had concerns about the possibility of misunderstanding that the remarks he could make as the Central Bank governor would undermine political neutrality amid the recent political turmoil.
The governor mentioned concerning the situation after the state of emergency, "Domestic demand was contracting faster than expected," adding, "To alleviate the sharp decline in market forecasts for economic growth at the beginning of the year and the resulting side effects, I thought some degree of supplementary budget was necessary along with interest rate cuts."
He further stated, "If the supplementary budget plan passes with bipartisan support, it could send a message to international investors that Korea's economic policies are being operated stably without being swayed by political situations, and I judged it would be the most effective means to maintain our national credit rating."
The governor also noted, "While the mention of the supplementary budget has triggered controversies over political neutrality, time will evaluate the right and wrong of my decision," stating, "Central Bank governors should maintain political neutrality, but as Keynes referred to his mentor Marshall, economists may need to be 'pragmatic at times as politicians.'"
The governor also mentioned the uncertainties that the global economy is currently facing. He diagnosed, "The IMF will also significantly lower its forecast for global economic growth tomorrow," adding, "Korea is no exception. Our economy, which has an export-oriented structure, is particularly vulnerable to changes in the external environment."
He added, "The tariff increases in major countries negatively affect our country's exports both directly and indirectly, and not only direct exports but also export goods produced overseas by our corporations, such as semiconductors from Vietnam and electronic products and automobiles from Mexico, may be significantly impacted."
Meanwhile, the FPA Medal is an esteemed award given to individuals who have had a positive impact on the international community and demonstrated responsible global leadership. Notable past recipients include Jean-Claude Trichet, former president of the European Central Bank, Paul Volcker, former chairman of the U.S. Federal Reserve, Kristalina Georgieva, IMF president, and John C. Williams, president of the Federal Reserve Bank of New York.