IMF advises limit on gov"t acquisition of corporate bonds

David Coe, senior representative of the International Monetary Fund (IMF)`s Seoul office, said Wednesday that the government¡¯s plans to acquire corporate bonds issued by private enterprises through banks should be temporary and extremely limited. His statement was analyzed as an affirmation of the IMF`s position that it would acknowledge Korea Development Bank`s acquisition of maturing Hyundai Electronics Industries corporate bonds but that the act should be temporary.

Coe made the remarks in a seminar on Korean restructuring and the nation`s economic outlook that was held at the Shilla Hotel under the sponsorship of the European Union Chamber of Commerce and Industry.

He added that the nation should do away with the idea that any company is "too big to fail." Coe evaluated that Korea had successfully overcome the lingering effects of the economic crisis but emphasized that restructuring should continue in order to strengthen national competitiveness. Speaking on restructuring in the financial sector, Coe pointed out that much progress has been made in terms of "hardware," including the abolition of numerous regulations, but added that reforms in "software" fields still have much room for improvement.

Coe noted that the Korean economy has been suffering from great difficulties since the latter half of last year but said that chances are slim that the nation would face another crisis. He forecast that the economy would begin to recover from its current woes starting in the second half of this year.