| [ MIT ] in KIDS 글 쓴 이(By): Charles () 날 짜 (Date): 1998년 6월 20일 토요일 오전 05시 05분 59초 제 목(Title): [CNN]S. Korea reforms successful.. S. Korea reforms successful IMF applauds tough measures; predicts shrinking economy, rising jobless rate June 19, 1998: 3:55 p.m. ET WASHINGTON (Reuters) - The International Monetary Fund praised South Korea on Friday for stringent implementation of harsh economic reforms. But it cautioned that confidence remains fragile and a weak Japanese yen could hamper recovery. The IMF's executive board projected South Korea's economy would shrink 1 to 2 percent in 1998 compared with 5.5 percent growth in 1997, while unemployment would spread to 6.5 percent of the work force from 2.7 percent last year. In spite of a sharp depreciation of South Korea's won currency, consumer price inflation was expected to rise only marginally to 8.2 percent in 1998 from 6.6 percent last year, reflecting falling domestic demand and few wage pressures. "Substantial progress has been made in overcoming the immediate external financial crisis, and the won has appreciated and stabilized," the IMF said in a written summary of its review, which concluded on May 29. "The impact of the crisis on the real economy, however, has been severe." Recent weakness in South Korea's equity markets signaled that confidence remains fragile and that difficult challenges lay ahead, the board said. Adding to worry was a struggling Japanese yen and political and economic turmoil elsewhere in Asia. The IMF extended South Korea a record-breaking $21 billion loan last year, aiming to help the country recover from a financial crisis triggered when the collapse of the won highlighted problems at banks and firms. The money forms part of a $58 billion international rescue deal, including promises of help from neighbor states and members of the Group of Seven industrialized countries. In the review, IMF directors urged South Korean officials to focus on monetary policy as a tool for maintaining a stable currency, and saw scope for further gradual reductions in interest rates if the won holds firm. They said decisive action to strengthen South Korea's troubled financial system was imperative and applauded progress made so far in rationalizing merchant banks. Shoring up commercial banks must be the next priority, the board said. Recent efforts to publicize a more realistic assessment of the size of nonperforming bank loan problems was supported by the IMF, as well as South Korea's commitment of public resources to support financial sector restructuring. However, some directors cautioned against the provision of public funds for banks that are not viable. Another challenge facing South Korea was corporate restructuring since "delays (in restructuring) would only serve to postpone economic recovery and undermine the credibility of the reform effort," the board said. Directors called for the implementation of a plan to solve corporate debt problems by June and noted that, in view of the continued difficulties experienced by small- and medium-sized firms in obtaining trade financing, the provision of temporary credit was necessary. |