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“Stalled FTA Has Adverse Effect on Korea’s Rating”

Posted February. 11, 2004 23:15,   


Visiting Korea for an annual consultation with the Korean officials, the U.S. credit rating agency, Moody’s Investors Services, expressed its concerns on Wednesday saying, “Delay in ratifying the Korea-Chile Free Trade Agreement will pose a negative influence on Korean credit rating.”

In a visit to the Ministry of Finance and Economy (MFE) this day, Moody’s delegation noted that, “if Korea fails to pursue the FTA, the decision making process of the Korean government will be assumed as inefficient which would lead to a negative effect on the rating.”

Accounting this to the reporters, Kwon Tae-shin, director general of the Ministry of Finance and Economy`s international finance bureau added, “however, given that the North Korean nuclear issues will be a matter of discussion in the six-party talks and that this year’s Korean economic growth looks optimistic, the chances that Moody’s will actually lower Korea’s sovereign rating are low despite the worries surrounding the FTA issues.”

Moody’s maintained the credit rating of Korea at “A3” last year but then downgraded the outlook from “Positive” to “Negative.”

Results of Korea’s credit rating are expected to be released one or two months after this year’s annual consultation.

Following the visit to the Ministry of Finance and Economy, and the Financial Supervisory Commission, Moody’s team plans to meet and have routine consultations with officials from the Ministry of Unification, the Ministry of Foreign Affairs and Trade, the Ministry of National Defense, and the Bank of Korea on the February 12, and with officials from the Korea Development Institute (KDI) and the Korea Fair Trade Commission on February 13.

Chi-Young Shin higgledy@donga.com