[EDITORIALS]Still More Bailout Money Needed?

Reading yesterday's report on the management of public funds by the Ministry of Finance and Economy presented to the National Assembly, we were appalled. Words fail us at the prospect that another round of fund raising and bailout spending may be necessary. The ministry said the government has spent 134.7 trillion won ($103 billion) of public funds on bailouts so far; an additional 13 to 14 trillion won will be spent during the second quarter and another 11 to 14 trillion won in the second half.

This means that a total of 158 to 162 trillion won will be spent to rescue ailing corporations and financial institutions. Only 32.8 trillion won, or 24 percent of the money already provided, has been reimbursed. What has the government done with that huge amount of money? Corporate and financial competitiveness is still abysmal despite the money thrown at the problem.

The looming question is how much more money the government can retrieve. Unfortunately, prospects are bleak. Twelve trillion won is said to be uncollectible, and industrial anaysts said recently that perhaps 60 trillion won will never be returned, a sign of poor government management. Even more important is whether the government can successfully wrap up corporate and financial restructuring with the public capital it has raised so far. Prospects seem to be dim. The government is pouring a massive amount of capital into subsidiaries of the Hyundai Group and Ssangyong Cement. If one of these companies becomes insolvent, the burden will be passed on to financial institutions, which means the government will raise additional capital from our pockets to bail out the financial sector. Scheduled plans to rescue credit unions have been delayed, enlarging the black hole into which we are pouring money.

The government may well have to raise more money before the end of the year. The possibility is rather high, in fact, because only 25 trillion won is left from the previous fund drives and 28 trillion won is needed to complete the restructuring. Of course the government contends that it can finish the job with the funds available, but our confidence in those assertions is long gone. Last year, the government pledged that there would be no additional fund raising, only to switch its tune after the general election and raise an additioal 40 trillion won. Not long ago, Park Seung, head of the public funds management committee, said the additional 40 trillion won was not enough. The Korea Institute of Finance said an additional 20 trillion won may be needed.

The government should do its best to avoid repeating past mistakes. It should bear in mind that if more funds are needed, the government and its economic cabinet members will be held accountable. Seoul should keep a close eye on insolvent firms to prevent financial chicanery and to force repayment of bailout funds. The government should recognize that the best solution is an economic recovery and restructured, efficient firms. The public funds management committee should enhance its efficiency and transparency of management so that no additional insolvancies occur, and tighten monitoring and supervision of the money provided so that no more funds are wasted.

The politicians who ruined the chances of holding a public hearing on public fund management, whose responsibility for mismanagement cannot be avoided, should also concentrate their efforts on pulling up the economy. The Board of Audit and Inspection should dispel all the doubts of the people by thorough audits of the management of public funds.