Revived Korea to pay back $7.7b to IMF

Revived Korea to pay back $7.7b to IMF

SEOUL (Reuters): South Korea said on Monday it planned to pay
off US$7.7 billion of its massive loan from the International
Monetary Fund by the end of this year as officials expressed
concerns the country had a surfeit of dollars.

President Kim Dae-jung and top economic officials painted a
rosy picture of an economy, badly wounded in Asia's currency and
debt crisis, that was well on its way to recovery.

"We have paid $4.8 billion back to the IMF from which we had
borrowed $19 billion. We plan to repay an additional $7.7 billion
within this year," Kim Dae-jung said in a speech to a forum of
U.S. pension fund managers.

The loans were part of a record $58.35 billion rescue package
that the IMF arranged for Korea in December 1997.

The aid money and a big infusion of both direct and portfolio
foreign investment has handed officials quite the opposite
problem they faced little more than a year ago -- an appreciating
currency that threatens export competitiveness.

The foreign exchange market has been awash in dollars and on
Monday officials tried to talk the won down.

"It is undesirable for the won to rise further," said an
official in a foreign exchange-related government office. "The
government is seeking strong counter-measures to control the
supply and demand of the dollars," he said.

The dollar was trading at around 1,223 won on Monday. At the
height of the crisis at the end of 1997, the won was more than
1,900 to the dollar.

A finance ministry official said state banks and corporations
would soon be buying dollars to stem the won's rise.

Many of those dollars have been brought in by foreign
investors, who helped key yet another rally on the Korea Stock
Exchange. The Korea Composite Stock Index rose 2.22 points or
0.32 percent to close at 689.64 on Monday after briefly breaching
the psychological 700 barrier.

The index has risen 13 percent over the past eight sessions as
falling interest rates draw foreign investors.

The perceived need to keep the won from appreciating too fast
is one of the reasons the government is promptly repaying its
dollar-denominated IMF loan, analysts said.

Another reason is to shore up its sovereign credit ratings,
which international ratings agencies have only recently upgraded
to just above investment grade.

Thomson BankWatch said on Monday it has affirmed South Korea's
sovereign risk rating of "BBB", with a "stable" rating outlook.
"There are some signs of economic recovery, more so than in
Thailand, even though the process is still unfolding slowly," the
international ratings agency said in a statement.