Roh, “Do Not Expand the Meaning of Government Supplementary Policy”

On August 24, President Roh Moo-hyun said, “Upon the occasion of taking measures, such as the recent fiscal expenditure policy or the tax policy to stimulate consumption, and the lowering of interest rates, some people are expanding the meaning of this as the government’s conversion to a reflation policy. This may make the people’s judgment become obscure.”

Upon expressing his opinion at a chief secretary meeting and a presidential aide meeting that were held this day, President Roh requested, “As there is a possibility that the principle and the consistency of the policy may sway by wrong press release, government employee should fully understand and seize control of current situation rather than being swept away with uncontrolled news reports.” As President Roh had announced at a Cabinet meeting yesterday that “some measures taken related to real estate should not be interpreted as a retreat in stabilization measures on home prices,” he continued to emphasize consistency in that policy once again. Some are also interpreting President Roh’s statement, which continued for two days, as fuel for some economic agency opinions that say, “A reflation policy is necessary for the stimulation of the domestic market.”

However President Roh reconfirmed his existing position in which he will not engage in short-term reflation policies in the statement he made this day, and he also warned that the fiscal expansion and the tax reduction policy, which are emerging among members of the government party, will have a certain limit.

President Roh said, “In the meantime, the government has been continuously coping with the situation and saving the economy with principles and consistency,” and pointed out, “But assuming as if the supplementary policy is finally being launched or as if the government had no reaction for the economy up to now is an ill situation that can disgrace the confidence of the government.”

President Roh added, “The lowering of the interest rate was recently executed upon the sole judgment of the Central Bank of Korea and the monetary board, and it is just a policy like a fiscal policy or a tax reduction policy,” and emphasized, “As I assure you once again, we have been concentrating on facing the situation and saving the economy, and will continue to do our best in the future to save the economy with consistency.”

President Roh also emphasized real estate policy, saying, “There will be no change in the policy which aims to stabilize home prices.”

Yet President Roh stated, “We will seek to conduct these separate policies realistically with flexibility while maintaining this objective and principles,” and pointed out, “There is concern that chaos may arise if the media becomes carried away over a big change in the real estate policy with just a few realistic policies.”

Jung-Hun Kim jnghn@donga.com