Time to Take Out Economic Crisis by Short-Term Foreign Debt and Household Debt

Korea Overcame foreign currency crisis with public fund of 157 trillion, but it weakened national finance. So if another ‘economic crisis’ appears, Korea may not have appropriate safety facilities.

Particularly, household debt and short-term foreign debt increase rapidly in these days, so some persons indicate that if government and private sector continue waste, Korea may suffer serious difficulties.

The indication is the result from experts in various sectors during the collection of data by Dong-A Ilbo for the ‘the 5th anniversary of foreign currency crisis’. Korean Government applied urgent assistant fund to IMF at 21st Nov. 1997 and become under the supervision of IMF.

Experts commented “Korea grasped a new opportunity to jump onto new stage by overcoming the crisis, but it can not be assessed completing restructure sufficiently.” And added “Korea is not on safety position because the possibility of economic crisis.”

Particularly, they are anxious for the worsening of national finance.

Park Gae-sung, accountant and Ex-Team Leader of Government Restructure of Ministry of Planning and Budget under existing government, insisted “The government announced that national debt was 120 trillion won, but actual amount is estimated 760 trillion won at least. The financial crisis is at very serious level.”

Accountant Park emphasized “From 1997 to the end of 2000, top 30 groups reduced their debts by 92.3 trillion won, but government debt increased by 119.2 trillion won during the period.” And added “The recovery of financial health by private companies and banks is the results of victimizing of the government financial health.”

Professor Chun Joo-sung, Ewha Women`s University indicated “The interest rate on public fund is paid from government budget de facto, so public fund should be included in government debt.”

Professor Cho Yun-jae, International School of Sekang University, is anxious “The foreign currency like of 1997`s will not happen easily, but there are many unstable factors such as the increase of household debt and short-term foreign debt etc, so if wise correspondence is not prepared, the crisis may happen in some where of Korea economy.”

Kwang-Hyun Kim Kwang-Am Cheon kkh@donga.com iam@donga.com