On economic front:
FOCUS-S.Korea wants reforms even if growth slows
By Yoo Choon-sik
SEOUL, June 18 (Reuters) - South Korea's finance minister said on Friday the
government would pursue economic restructuring even if it means slower growth.
''Faithful implementation of restructuring plans remains the government's top policy
priority even at the cost of slower economic growth,'' Finance Minister Kang Bong-kyun
said in a speech at a breakfast meeting of senior newspaper and broadcast editors.
The remarks came a day after he emphasised the government would push ahead with a
requirement for large business conglomerates to cut the debt-to-equity ratios of their
affiliates below 200 percent by the end of this year.
South Korea's gross domestic product grew a real 4.6 percent in the quarter to March from a year earlier, following a 5.3 percent
decline in the previous quarter.
The government now expects GDP to grow by about five percent for 1999, compared with a 5.8 percent contraction in calendar 1998,
the economy's worst performance on record.
A recent Reuters poll of 10 research houses produced an average forecast for GDP growth of 4.8 percent this year and 4.5 percent
next year.
Some analysts have raised concerns that the economy's rapid recovery from last year's severe recession could lead to companies
becoming complacent about their restructuring efforts.
''There are even concerns that the pace of economic recovery is too fast. Regarding these concerns, the government thinks there is
nothing to worry about, under the assumption that restructuring is promoted with consistency,'' Kang said.
He said the economic recovery would contribute to increasing the government's revenue this year by about five trillion won ($4.3
billion) and the government would spend half of the money to offset this year's budget deficit.
''Consequently, this year's budget deficit will fall to about four percent of GDP from the earlier expected five percent,'' Kang said. In
1998, the country's GDP amounted to 449.51 trillion won at current prices.
He said the trend, combined with the government's efforts in other sectors, would help the nation achieve a balanced budget two to
three years ahead of its 2006 target.
The other half of the increased revenue would be spent to support financial and tax favours for business start-ups and to help workers
through soft loans, he added.
The government planned to draft a supplementary budget scaled at 1.1 trillion won, Kang said, without giving a time frame for the
extra budget.
He said the government would allow employee stock ownership cooperatives, usually allocated for some 20 percent of rights issues, to
sell their shares after holding them for one year.
The minimum shareholding period for such cooperatives has been set to be cut to three years this year from the current seven to help
workers profit from the bullish local market.
($1 equals 1,166 won) |
