Koo Yun-cheol, Deputy Prime Minister for the Economy and Minister of the Ministry of Economy and Finance, on the 15th (local time) proposed a strategic fiscal policy to support growth through bold fiscal injections.
On this day, Deputy Prime Minister Koo attended the "4th Group of 20 (G20) Finance Ministers and Central Bank Governors' Meeting and the Annual Meetings of the International Monetary Fund (IMF) and the World Bank (WB)" held in Washington, D.C.
At the meeting, Deputy Prime Minister Koo shared views with finance ministers and Central Bank governors of major countries on issues of the global economy and financial stability and on the international financial system.
In the first session, Deputy Prime Minister Koo stressed that fiscal injections are needed to respond to structural transitions such as technological innovation and demographic changes that the global economy faces amid uncertainty.
Deputy Prime Minister Koo introduced Korea's hyper-innovation economy and artificial intelligence (AI) grand transition strategy to raise the potential growth rate. The potential growth rate is the maximum economic growth rate that can be achieved by making full use of all production factors. Koo shared investment plans for AI projects such as AI semiconductors and manufacturing, and for hyper-innovation technologies such as power semiconductors and small modular reactors (SMR).
He also expressed concern that accumulated global imbalances are emerging as a risk factor for the world economy. He then raised the need for G20-level discussions to resolve global imbalances.
As this was his first appearance on a multilateral international consultative body stage since taking office as deputy prime minister, he emphasized the significance of the G20 as the top forum for international economic cooperation.
In the second session, Deputy Prime Minister Koo said that reforms of multilateral development banks (MDBs) must continue by advancing evaluation systems.
He also urged the use of innovative financial products by MDBs and efforts to create favorable investment conditions in recipient countries to invigorate blended finance. Blended finance is international finance that supports development projects such as renewable energy projects and infrastructure building in recipient countries by combining public funds and private capital.
Deputy Prime Minister Koo emphasized swift and orderly debt restructuring and enhanced debt transparency based on the G20's debt restructuring framework to ease the debt vulnerability of developing countries. He pointed out the need for preemptive support along with responsible structural reforms by debtor countries so that developing countries experiencing temporary liquidity crises do not fall into default.
Deputy Prime Minister Koo noted that nonbank financial institutions (NBFIs) can amplify risks such as capital flow volatility and foreign exchange (FX) risks. He went on to call for continued discussions on capital flows for macro-financial stability.
On this day, Deputy Prime Minister Koo also attended a G7 high-level dialogue at the invitation of Canada, the chair of the G7 meeting. Participants agreed on the need to strengthen international cooperation to respond to the threat of new types of financial fraud and crimes using AI technology.
Deputy Prime Minister Koo met with Canada's Finance Minister François-Philippe Champagne to discuss recent trade issues. They also exchanged views on economic cooperation measures, including the development of critical minerals and AI.