Government`s Contingency Economic Measures

The government has pledged to work out additional measures to revitalize domestic consumption in case U.S. retaliatory war against terrorism extends over a long period.

The government also decided to consider raising airline price to ease financial difficulty of the airline business circles, and to push forward with a plan to expand the export finance and the insurance support for the export companies that deal with the U.S. and Middle East area.

The government hold an emergency economic minister`s meeting, presided by Deputy Prime Minister Jin Nyum, and a businessmen-policymakers joint contingency economic measure meeting, and prepared such economic measures.

As the representatives of the economic organizations proposed the flexible operation of realty-transfer tax to revive consumption and investment, and the development of mid-long term investment items in stocks, the government decided to consider this positively.

Moreover, the government also decided to check the trend of fund market and foreign exchange and stock market everyday. If the foreign exchange rate drops sharply, the Bank of Korea would be directly involved to take measure for the market stability.

The government decided to push forward with the extension of expiration date of company bonds and commercial paper amounting to 700 billion won based on the premise of self-help of airline companies, and to consider temporary exemption of special excise tax on airplane oil. If the situation becomes worse, the government plans to raise the airline price.

The government also decided to expand the financial and insurance support for the exports on the U.S. and Middle East area, and to enforce measures for the security of workers, who are in the Middle East area, and the transport stabilization for ships which pass through this area.

Along with this, if the international oil prices rise up as the war extends over a long period, the government decided to lower the import prices by applying the allotted tariff and the flexible tax rate. If necessary, the government decided to issue the right to adjust demand and supply of oil.

The government decided to draw up the second supplementary budget using the residual fund amounting to 2 trillion won, and to request for the consent of the National Assembly within this week to revitalize domestic consumption.

The government also decided to push forward with measures as such; to supply sufficient fund; to ease regulations on corporation finance and to revitalize service-sector business; to expand the public work and to support the establishment of independent business; to expand the investment of the social overhead capital (soc) facilities and to stimulate the construction of housing.

Deputy Premier Jin reaffirmed that the government would inject ample liquidity into the market to prevent potential credit crunches.

He was committed to ensure stable supplies of oil in case of price hikes in crude oil on international markets.

yhchoi65@donga.com