S. Korea to grow in 2002: IMF

S. Korea to grow in 2002: IMF

Reuters, Washington

The International Monetary Fund on Tuesday said South Korea's
economy will grow this year, but that uncertainties remain for
the short-term and reforms are still needed to ensure sustained
growth ahead.

The Washington-based lender said South Korea has dealt with
the recent global economic downturn better than many other
economies and that the outlook overall looked positive.

The fund said South Korea's economy should grow at an annual
rate of 4.0 percent this year, up from an estimated 2.9 percent
in 2001. While growth will pick up, inflation is forecast to
remain in check at 2.2 percent in 2002, down from 4.1 percent
last year.

The fund said that while the economy was poised for growth,
uncertainties remained in the near-term, although it also noted
that the Bank of Korea still had room for monetary maneuvering in
case of further weakness.

Structural reforms were still needed, especially in the
beleaguered corporate sector as well as in the financial arena,
in order to ensure sustainable growth in the future, the IMF
said.

Non-viable companies and corporations with unsustainable
losses should be liquidated, the IMF said, expressing concern
that the sale of assets of poorly performing companies and
financial institutions had slowed.

The lender also said that the bankruptcy system and insolvency
laws should be reformed.

While the IMF was pleased with recent progress made in the
financial sector, it said that South Korean authorities should
continue their efforts to solidify the financial system.

In this regard, it welcomed plans to privatize several banks,
which it said will help the institutions operate more
efficiently.

The lender also welcomed South Korea's decision to concentrate
government spending in the first part of the year, which will
stimulate the economy when a boost is most needed. It said,
however, that fiscal policy should not "overperform" as it has in
recent years.

The fund also said the South Korean government should improve
budget planning, and welcomed local authorities' plans to have
ministries report monthly on budget execution this year.