South Korea's Deputy Prime Minister and Minister of Finance Koo Yoon-cheol announced the government's second-half economic strategy on the 15th at Cheong Wa Dae, targeting consumer price inflation below 3% through agricultural product discounts, expanded supply, and frozen public utility rates. The Ministry of Finance will establish a 'Strategic Investment Account' within Korea Investment Corporation (KIC) for long-term investments in domestic and international strategic industries, expanding the existing savings-type sovereign wealth fund into a comprehensive model. The government plans to release detailed operational plans for the Korean sovereign wealth fund and a won internationalization roadmap this month, alongside public institution restructuring measures including stricter oversight of subsidiaries and CEO accountability for major accidents.
Ministry of Finance Implements Agricultural Discounts and Frozen Utility Rates for H2 Inflation Control
The Ministry of Finance will conduct the largest-ever discount campaign on all agricultural, livestock, and fishery products in July and August. The government will import an additional 200 million fresh eggs and directly import 2,000 tons of Norwegian mackerel for low-price distribution. Hairtail and squid will be purchased directly by the government for discount sales. Electricity and gas rates will remain frozen in the second half, and households receiving energy vouchers using kerosene and liquefied petroleum gas (LPG) will receive an additional 147,000 won in winter support. The government will review the removal of the petroleum maximum price system considering international oil prices, domestic supply conditions, and public burden, and examine whether to extend the oil tax reduction measure. Diesel and tax-free oil price-linked subsidies for freight trucks and farmers and fishermen will be maintained until September and extended until year-end if necessary. The Price Stabilization Act will be amended in the second half to allow the imposition of fines and enforcement penalties on violators of hoarding prohibition measures.
![Deputy Prime Minister announces H2 economic growth strategy]()
Deputy Prime Minister announces H2 economic growth strategy [Source: Yonhap News file photo]
KIC Establishes Strategic Investment Account for Semiconductors and AI Sectors
KIC will create a 'Strategic Investment Account' responsible for domestic and international strategic investments. Funding will come from government capital contributions, donations, and operating profits. Investment returns can only be used for reinvestment, dividends, and treasury returns. Investment targets include strategic industries such as semiconductors, artificial intelligence (AI), materials/parts/equipment, nuclear power, space/aviation, and quantum technologies, as well as key industries like finance and infrastructure, and overseas supply chain-related industries. Investments will be made through a patient capital approach without withdrawing funds for extended periods, and joint investments with overseas sovereign wealth funds will be pursued. The existing foreign exchange reserve consignment account and the strategic investment account will maintain strictly separated accounting to prevent damage to external trust in foreign exchange reserves.
Government Announces Public Institution Restructuring and Won Internationalization Plans
The government will strategically restructure key public institutions and integrate institutions performing similar or overlapping functions from a consumer perspective. The necessity of maintaining subsidiaries and overseas branches established by public institutions will be reviewed, and related laws will be amended to allow the dismissal of heads of institutions where major accidents have occurred. The current State Property Act will be completely reorganized into a National Asset Framework Act covering not only real estate but also new types of assets such as financial assets, intellectual property, and virtual assets. The won internationalization roadmap, including 24-hour foreign exchange market operation, establishment of an offshore won settlement system, and improved foreign access to the domestic capital market, will be released this month. Lee Hyung-ryeol, Director-General of International Finance at the Ministry of Finance, stated, "This is work to convert the won, which has been a regulated currency, into a freely exchangeable currency," adding, "We are shifting to an aggressive foreign exchange policy to enjoy the economic benefits that can potentially be enjoyed."
FAQ
What inflation target did South Korea's Ministry of Finance announce for the second half?
The Ministry of Finance announced a target to manage consumer price inflation below 3% in the second half through agricultural product discounts, expanded supply, and frozen public utility rates. Deputy Prime Minister Koo Yoon-cheol presented these measures on the 15th at Cheong Wa Dae.
What industries will KIC's new Strategic Investment Account target?
The Strategic Investment Account will invest in strategic industries including semiconductors, artificial intelligence (AI), materials/parts/equipment, nuclear power, space/aviation, quantum technologies, key industries like finance and infrastructure, and overseas supply chain-related industries. Investments will use a patient capital approach and pursue joint investments with overseas sovereign wealth funds.
When will the government release the Korean sovereign wealth fund operational plan?
The government plans to release the detailed 'Korean Sovereign Wealth Fund Introduction Plan' this month, alongside a won internationalization roadmap covering 24-hour foreign exchange market operation and offshore won settlement system establishment.
