Moody`s: Korea’s Wealth Gap Is Fair

Thomas Byrne, a vice president of Moody`s Investors Service, the largest credit rating firm in the world, said in an international telephonic interview with Dong-A Ilbo on February 24, “Although the Korean government views the disparity problem as quite severe, currently the redistribution of wealth is quite fair. According to Gini`s coefficient, Korea has secured its statue at a better level of redistribution compared to France and Canada, even including the United States and China. The level of Korean redistribution is below the level of those ratings at the top, such as Denmark.”

Byrne added, “Korea seems to bearing the burden of increasing financial loss and imposing taxes due to its aging trend, but now it seems not to be a big issue.”

The Gini’s coefficient that Byrne used indicates the degree of concentration or non-uniformity of distribution, with distribution becoming more uniform as the coefficient approaches zero, and distribution becoming more non-uniform as the coefficient approaches one.

The report released by the World Bank in 2004 shows that Korea’s Gini`s coefficient ranked 27th (0.316) among 127 countries, above the United States (0.408), China (0.447), France (0.327), Canada (0.331) and the United Kingdom (0.360).

“Korea’s economy remains stable. But for a while, Moody’s will keep its current rating, A3,” he said regarding the latest released report that Moody`s may raise Korea’s credit rating. He expressed his strong opinion that the credit rating on Korea will not be raised.

He said Korea’s rating will not be raised on account of the North Korea nuclear issue. “The North has been a threat, but since the 9/11 terror attacks, its threat has been viewed as more severe. The six-party talks have not been a step forward since the September 2005 meeting,” Byrne explained.

Byrne, a vice president in charge of Asian ratings, visited Korea at the head of a Moody`s credit rating team and met with officials of the Institute of Foreign Affairs and National Security and the Ministry of Finance and Economy from February 15-17.

Sun-Woo Kim sublime@donga.com