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Thursday, December 11, 1997 Published at 14:12 GMT



Business

South Korea's President apologises again over economy
image: [ South Korean President Kim Young-Sam bows before making his TV apology ]
South Korean President Kim Young-Sam bows before making his TV apology

South Korea's President, Kim Young-Sam, has appeared on television to say that he is to blame for the state of the country's economy.

It was the second time in three weeks that the president had apologised for the crisis battering the South Korean economy.

In a televised speech, he said he felt responsible for the current situation, which has forced the country to agree to stringent economic reforms in return for a multi-billion dollar aid package from the International Monetary Fund.

"All the responsibility for the current crisis lies in me as president," he said. "I am whipping myself every day thinking of the despair of the entrepreneurs who have defaulted on loans and fathers who have lost their jobs."

He urged the Korean people to tackle the fundamental causes of the economic crisis which he identified as excess borrowing and a focus on external expansion.

Critics not satisified

The president's speech did not mollify his political opponents.

Kwon Yong-Gil, a union leader who is running in next week's presidential elections, called for the prosecution of the president and his economic team.

Mr Kwon made the call after shaving his head in a traditional gesture of protest.

A group of dissidents in the southern city of Kwangju described President Kim's apology as belated, and said he should punish top officials and then step down as president.

Korean currency plunges

The president's speech also appeared to have little effect on the foreign exchange markets. The Korean currency, the won, lost another 10% of its value in the first three minutes of trading.


[ image: Trading was sharply down on the Seoul stock exchange]
Trading was sharply down on the Seoul stock exchange
Share prices were also down. At the close of trading, Seoul's main stock market index, the Korea Composite, was nearly 6% lower on the day.

The faltering confidence in the economy was aggravated by a downgrade of South Korea's foreign currency ratings by two leading rating agencies, Moody's Investors Service and Standard and Poor's.

Moody's cited new information indicating South Korea's foreign currency needs may be greater than disclosed.

It also downgraded 31 Korean issuers, many of them banks, in the wake of the foreign currency downgrade, adding that both sets of new ratings were under review for a possible further downgrading.

Standard and Poor's said that liquid central bank reserves had fallen to some $10bn - less than a month's import cover. It said South Korea'a short-term debt had reached $100bn - much higher than previously reported.

In recent weeks, the won has lost nearly half its value as the full extent of the country's financial problems become apparent.

Doubts over IMF package

The government had hoped the IMF rescue package of $57bn would be enough to restore international confidence, but the money has not come in fast enough and there are renewed doubts about South Korea's commitment to carry out reforms demanded by the IMF.

The South Korean news agency, Yonhap, reported on Thursday that talks were underway with the IMF so that the government could receive six billion dollars from the rescue package earlier than planned.

The agency quoted a government official as saying the government was also trying to stabilise the foreign exchange market by negotiating to receive $10 billion as soon as possible.

Meanwhile, conspiracy theories have surfaced in Korea over the huge bail-out package, with suggestions that the United States and Japan helped push the country to the brink.

"Who wants to tame Korea through the IMF?" read a front-page headline in the Korea Times, echoing suspicions aired by Korean-language newspapers that Tokyo and Washington had a hand in the deal.

Diplomats and analysts reject the theories, citing the IMF chief Michel Camdessus' comment last week that Seoul had waited until it was "ten days from disaster" before it finally appealed for help.


 





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