Premier Advocates Approval from National Assembly on Public Fund Injections

Prime Minister Park Tae-joon announced on May 16 that "We must resolve issue of public fund transparently with approval from the National Assembly if necessary," at a meeting with executives from the prime minister's office. Park Jung-ho, chief spokesperson of the Prime Minister, reporting the statement, added that Prime Minister Park said "investors are still uneasy about restructuring in financial and investment trust sectors."

The remarks are expected to cause controversy, as the prime minister's comments counter a previous announcement by Lee Hun-jai, the Finance and Economy minister, on May 15. Lee announced that "there is no plan to obtain approval from the National Assembly in order to raise the 14 trillion won of public funds needed this year." Lee Ki-ho, the executive advisor on economic policy of Chong Wa Dae, shares the same point of view as Minister Lee.

Prime Minister Park scolded the ministers of economic bureaux at a presidential cabinet meeting, saying, "there are examples of repeated public fund injections due to inaccurate insolvency evaluations, as in the case of Daehan Investment Trust, Korea Investment Trust and Hyundai Investment Trust Securities."

Park expressed concerns that, "When the new evaluation system for bonds at market prices is introduced on July 1, it is possible that a serious crisis will occur with the inclusion of Daehan Investment Trust and Korea Investment Trust." According to Park, the insolvency of the investment trust sector will be aggravated by introducing the new evaluation system, which estimates the prices of bonds by market value rather than book value.

He pointed out that "it is necessary to clarify the demand for additional public funds needed for the financial sector including insolvent investment trusts and the Korea First Bank." Park also pointed out that "ministers of economic bureaux and the presidential advisor on economic policy must consider the impact on the market as well as the method of estimation when mentioning the needed public funds."

Prime Minister Park emphasized that "we must demand responsibility from the managers of the investment trust companies. There is a tendency for certain companies to enjoy the workout process. Therefore, it is necessary to establish a workout deadline."

In addition, President Kim commented that "it is important to prepare countermeasures to protect the national credit rating, as it may be downgraded when the trade balance is lowered." He continued that "we could consider an incentive system for domestic product consumption as well as energy-saving measures."

Prime Minister Park Tae-joon announced on May 16 that "We must resolve issue of public fund transparently with approval from the National Assembly if necessary," at a meeting with executives from the prime minister's office. Park Jung-ho, chief spokesperson of the Prime Minister, reporting the statement, added that Prime Minister Park said "investors are still uneasy about restructuring in financial and investment trust sectors."

The remarks are expected to cause controversy, as the prime minister's comments counter a previous announcement by Lee Hun-jai, the Finance and Economy minister, on May 15. Lee announced that "there is no plan to obtain approval from the National Assembly in order to raise the 14 trillion won of public funds needed this year." Lee Ki-ho, the executive advisor on economic policy of Chong Wa Dae, shares the same point of view as Minister Lee.

Prime Minister Park scolded the ministers of economic bureaux at a presidential cabinet meeting, saying, "there are examples of repeated public fund injections due to inaccurate insolvency evaluations, as in the case of Daehan Investment Trust, Korea Investment Trust and Hyundai Investment Trust Securities."

Park expressed concerns that, "When the new evaluation system for bonds at market prices is introduced on July 1, it is possible that a serious crisis will occur with the inclusion of Daehan Investment Trust and Korea Investment Trust." According to Park, the insolvency of the investment trust sector will be aggravated by introducing the new evaluation system, which estimates the prices of bonds by market value rather than book value.

He pointed out that "it is necessary to clarify the demand for additional public funds needed for the financial sector including insolvent investment trusts and the Korea First Bank." Park also pointed out that "ministers of economic bureaux and the presidential advisor on economic policy must consider the impact on the market as well as the method of estimation when mentioning the needed public funds."

Prime Minister Park emphasized that "we must demand responsibility from the managers of the investment trust companies. There is a tendency for certain companies to enjoy the workout process. Therefore, it is necessary to establish a workout deadline."

In addition, President Kim commented that "it is important to prepare countermeasures to protect the national credit rating, as it may be downgraded when the trade balance is lowered." He continued that "we could consider an incentive system for domestic product consumption as well as energy-saving measures."
Ko Jung-ae ockham@joongang.co.kr

by Ko Jung-ae