IMF Doubts the Viability of the Government`s Economic Measures

"Necessary, but doubtful for visible effects on the economy," assessed the International Monetary Fund (IMF) on South Korea`s major economic policies, including the Integrated Investment Plan. The recommendation, which appeared on the “Report on the Result of the Annual Council with the South Korean Government,” although not impulsive, will affect some of the ongoing government measures.

According to the integrated investment plan, the centerpiece of the government’s policy this year, the government will generate 8-10 trillion won fund from private capital to invest in the public sector in an attempt to stimulate the sluggish Korean economy.

IMF expressed its concern on the report, saying, "Additional measures to boost the economy are necessary, but this plan will lead to possible financial fraud, which may be just one of many problems."

The conflicting nature of guaranteeing sound profit to attract private capital while limiting national budget spending will be challenging.

Kim Young-ha, economics professor at Soonchunhyang University, said, "Since IMF pointed out some fundamental issues, the government should reconsider the plan before executing it. Fundamental change seems inevitable."

Policies aimed at medium-and-small-sized companies (SMCs) did not receive good marks from IMF either. Taiwan, the nation with highly competitive SMCs, has maintained its Credit Guarantee Ratio per GDP at a mere 1.5 percent, while that of South Korea remained at 6.25 percent.