Korea: Amid looming recessions and mounting concerns about the "second IMF crisis," the government and ruling party are revealing sharp differences

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Government, ruling party reveal difference in economic policies

Amid looming recessions and mounting concerns about the "second IMF crisis," the government and ruling party are revealing sharp differences over how to cope with these issues, officials and observers said yesterday.

The participants at joint meetings between lawmakers from the ruling Millennium Democratic Party (MDP) and officials from economic ministries conceded that disagreements over economic matters have begun to surface in recent weeks, particularly since mid-September when the stock market started its crash in earnest.

Ruling party officials said that recent government moves, including the rate increase for mass transportation, proposed hikes in medical insurance fees and sudden jumps in fuel prices, would stir public discontent, and therefore should be reconsidered.

The ruling party has also said that people are getting fed up with the government's economic and financial reform programs, which many think is not producing results, while only increasing the burdens of taxpayers.

Rep. Chang Che-shik, chairman of the Special Committee on Budget and Account, said over the weekend that the government should be more honest in making policy proposals so that people trust what the government is saying. Other MDP lawmakers said they suspected that even the extra 40 trillion won ($36 billion) in state funds might not be enough to complete financial reforms by next February as the government has forecasted.

They also said that if the economy does not show signs of recovery, the government should consider reassessing next year's budget that limits funding for large-scale social infrastructure projects, as a means of reviving the economy.

"Depending on the circumstances, the government must be willing to spend more money instead of sticking to its original goal of balanced budget," said a top party official.

Jeon Yun-churl, minister of planning and budget, said last month most construction projects would be concentrated on completing three highway projects and expanding existing dock facilities and railroad links.

On the state of the economy, Rep. Lee Hai-chan, the ruling party's chief policymaker, said that the unstable stock market, high fuel costs and the failure to find a buyer for Daewoo Motor Company was fueling uncertainties amongst investors.

Government officials, however, stressed that politics should not interfere with economic issues. They also said that hikes in fuel prices were attributed to outside factors that were beyond their control. The officials then reiterated commitment to balancing the budget deficit by 2003.

Officials added that though some analysts are calling the recent downturn in the economy as the beginning of another IMF-type crisis, such predictions were premature and ill-founded.

"All indicators show that the Korean economy should enjoy a healthy 8-9 percent in growth next year," said an official at the Ministry of Finance and Economy. He also suspected that the negative image that economic reform programs were receiving did not reflect the sentiments of the general public but were being fueled by those who were forced to give up their vested interests.

Parliamentary watchers said that though the difference in opinion is not so wide at the moment, if the two sides continue to clash on economic policies, this could cause trouble for the administration in the second half of its term.

Updated: 10/02/2000

http://www.koreaherald.co.kr/news/2000/10/__02/20001002_0204.htm

-- Carl Jenkins (Somewherepress@aol.com), October 02, 2000

Answers

South Korea could be the source of falling Asian markets. Samsung has about one-third of the Asian chip business, and is about to topple.

Correct me if I'm wrong, but if they go down, it will be a shot heard around the world.

-- Chance (fruitloops@hotmail.com), October 02, 2000.


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