Government overhauls its policy on energy

The government has overhauled its policy in connection with the high international oil price, and has adopted a policy with emergency countermeasures for the worst case scenario of the 3rd oil shock.

The government held an emergency economic ministerial meeting on September 16. led by the Minister of Finance and Economy to decide that the passive policy which had been in place has lost its effect, and that there is a need to re-examine the policy from ground zero to prepare a revised policy for the National Assembly session scheduled to open on September 19.

The failure of the previous policy is that the government has predicted that the rising international oil price is temporary. However, the current stance by the government points to its acknowledgment that the policy has been flawed. Accordingly, assuming that the high oil price is inevitable in the long run, many other revisions of overall macro-economic index will be necessary including as balance of payment, inflation, and growsh rate.

The Assistant-Minister of Finance and Economy Lee Kun-Kyong held a press conference following the meeting, and stated that there was yet another possibility of skyrocketing oil price due to the uncertain developments in Iraq and Kuwait. He added that the government is looking to a contingency plan in case of the worst possible scenario becoming reality.

The government also decided to suggest a possible negotiation partner for the Dawoo Crisis as soon as possible. The creditor banks revealed that they would solidify a detailed rescue package which may include restoring normal operation of the factories as well as various sell-offs.

Choi Young-Hae moneychoi@donga.com