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 Crisis
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17 May 00 04:14
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30 Trillion (more!) needed for South Korean Financial Sector
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Additional funds will not raise taxes, to come from borrowing, bonds and leftover amount
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Although the South Korean government announced on Monday that 101.9 trillion won had been spent on financial reforms since the eruption of the 1997 financial crisis, another 30 trillion won would be needed.
Twenty trillion won will be utilized this year and another to trillion can be delayed until 2001. The 20 trillion won will be raised through borrowing by Korea Asset Management, issuance of asset-backed securities and exchangeable bonds and 6.6 trillion won that is left over from a public recapitalization fund.
The 101.9 trillion won already spent includes the original 64 trillion won recapitalization fund established to but up bad loans and recapitalize the cash-strapped financial sector. Another 12.1 trillion won was recycled from the sale of bad loan portfolios and 25.8 trillion won was allocated in 'separate funds.'
In the midst of the financial crisis, South Korea nationalized most major banks and was forced to turn to the IMF for a US458.35 billion bailout in December 1997.
The IMF required sweeping changes in the financial sector and has prodded the government to increase bank privatization. The Koreans want to improve the bottom line before privatization.
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