Gov"t Vows to Boost the Economy

The government intends to focus its policies squarely on boosting the economy.
To do so, the government plans to lower the level of interest rates by increasing the money supply and mitigate people's tax burden.
The Bank of Korea (BOK) will induce a lowering of the call interest rate (interest rate for short-term money between financial institutions) from the current 8% level to 7%. BOK, which had continually refused the recommendations of the Ministry of Finance and Economy (MOFE) that the level of interest rates should be lowered, finally agreed to lower interest rates. President Kim called for a fast boosting measures on September 27.
The final target of the BOK is to lower the level of financial institutions' loan interest rates. As of the end of August, the level of financial institutions' loan interest rates averaged 5.3% points higher than that of deposit interest rates. It is an abnormally high level.
Therefore, the BOK intends to lower the difference of the two interest rates to 2.5%, the gap recorded last November before the IMF bail-out.
The BOK will also increase the money supply by as much as 7 trillion won by the end of the year.
A senior official from MOFE predicted, ' The interest rates for loans will fall in the fourth quarter.'
Meanwhile, the government will lessen the taxes imposed on investment toward some services including computers. Tax experts are saying that the government needs to lessen other tax burdens additionally so as to really boost the economy.