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Korea's finance minister vows firm stance despite impeachment

South Korea's top economic policymaker said Friday that the government will remain steadfast in implementing economic policies and make full efforts to stabilize the economy in the aftermath of an unprecedented court ruling to oust the country's president.

"The government will keep close tabs on pending trade issues and a possible US rate hike and take swift and resolute action against any possible internal and external risks if necessary," Finance Minister Yoo Il-ho said in an emergency staff meeting held in Seoul. "Policies like frontloading government spending and economy-stimulating packages will be implemented as planned."

South Korea's Finance Minister Yoo Il-ho (center) speaks at an emergency staff meeting in Seoul on March 10, 2017. (Ministry of Strategy and Finance)
South Korea's Finance Minister Yoo Il-ho (center) speaks at an emergency staff meeting in Seoul on March 10, 2017. (Ministry of Strategy and Finance)


Yoo said he sent letters to three major global credit ratings agencies, including Standard & Poor's, to stress that the South Korean economy has a stable economic system to overcome the current political challenge.

Meanwhile, such international agencies said the court's ruling to remove the top leader will have limited impact on the Souh Korean economy.

"The conclusion of the impeachment process removes one important element of political uncertainty, allowing a new president to come in and focus on formulating reforms that address Korea's structural challenges," Moody's Investors Service said in a statement.

But the global credit appraiser said it is worried about challenges that Asia's fourth-largest economy now faces, saying "Upside risks to our growth forecast of 2.5 percent for 2017 are limited given other domestic and external headwinds such as high household debt, corporate restructuring, growing tensions with China over THAAD, and uncertainties over how the US administration's trade policies will affect Korea."

S&P Global Ratings also said it will not change South Korea's sovereign credit rating of AA, the second-highest rating on S&P's sovereign grade table, although some policies will be delayed during the upcoming presidential campaign period.

"The Korean Constitutional Court's decision to uphold the impeachment of President Park Geun-hye does not have an immediate effect on the sovereign credit rating on South Korea," it said.
"Despite the protests in the wake of the judgment, we expect that the situation will calm down in the near future."

"We have to do our utmost to help foreign investors stay calm," said Yoo. "And we have to get well prepared for a future government transition."

Earlier in the day, the Constitutional Court upheld the National Assembly's impeachment of Park Geun-hye over her abuse of power and involvement in a bribery scandal. It took effect immediately.

As a result, the presidential election is expected to be held in early May. (Yonhap)

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