Korea targets 2% GDP growth: IMF<\/p>\n
SEOUL (Reuters): South Korea has targeted 1999 annual GDP
\ngrowth of two percent but growth could be higher, the Finance
\nMinistry said on Friday in its latest policy review with the
\nInternational Monetary Fund.<\/p>\n
Prospects for higher gross domestic product growth would
\ndepend "critically on continued improvements in domestic
\nconfidence, as well as the external environment," the review
\nsaid.<\/p>\n
GDP was estimated to have contracted more than five percent in
\n1998 from a year earlier.<\/p>\n
The fifth quarterly review of South Korea's economic policies
\nwill be presented at end-March to IMF directors who are expected
\nto approve release of another $250 million in aid to Korea.
\nFuture reviews will be done on a semi-annual basis.<\/p>\n
The IMF arranged a record $58.35 billion bailout for South
\nKorea in December of 1997 after a severe foreign exchange crisis
\nleft Korea, once the world's 11th largest economy, on the brink
\nof sovereign default.<\/p>\n
The 39-page quarterly review covered policies on restructuring
\nbanks, non-bank financial institutions including insurers and
\ncorporations.<\/p>\n
South Korea would set a timetable by June 30 to dispose of the
\ngovernment's share of holdings in domestic commercial banks and
\nsaid it would prepare by May 15 guidelines for stricter and more
\nforward looking provisions for non-performing bank loans, it
\nsaid.<\/p>\n
On inflation, the review said Korea would contain the increase
\nin consumer prices to around three percent this year. Consumer
\nprices rose 7.5 percent last year.<\/p>\n
The current account surplus, which topped $40 billion last
\nyear, would "narrow significantly, but remain substantial" in
\n1999, it said.<\/p>\n
The current account surplus has been estimated at about $20
\nbillion this year, though the IMF review contained no target.<\/p>\n
Interest rate policy would continue to be conducted in a
\nflexible manner, the review said.<\/p>\n
"Interest rates, which have been reduced significantly to
\nsupport the recovery, may continue to be lowered if this is
\nconsistent with achievement of the inflation target and providing
\nthat the external position remains strong," it said.<\/p>\n
Budgetary spending accelerated in the fourth quarter of 1998
\nand outlays for a social safety net increased as planned, but
\nother expenditures, including interest costs, were lower than
\nexpected, it said.<\/p>\n
Korea posted an estimated 1998 fiscal deficit of about four
\npercent of GDP, compared to a target of five percent, it said.<\/p>\n
The aim of fiscal policy in 1999 would be to provide "a
\ncontinued stimulus to the real economy in conjunction with a
\nfurther strengthening of the social safety net," it said, adding
\nthe fiscal deficit of five percent of GDP had been targeted.<\/p>\n
Direct social safety net outlays were projected to increase by
\nat least one-third in 1999 to 1.75 percent of GDP, it said.<\/p>",
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