Pres. Lee Warns Against Panic over Financial Crisis

President Lee Myung-bak said yesterday, “The government is capable of overcoming the dollar shortage with its foreign reserves and financial authorities also can ease the currency liquidity shortage. The government will also not allow any financial company or other business go bankrupt even when they are viable.”

In an address to the National Assembly yesterday on next year’s fiscal budget and management priorities, he said the financial crisis this time is far different from the one that occurred a decade, ruling out another foreign currency crisis.

“Most worrisome for Korea, which is heavily reliant on exports, is that the global financial crisis aggravates the real economy. We have to seek international policy cooperation and boost domestic consumption. The government is determined to provide liquidity to financial markets in a preemptive, sufficient and decisive manner until psychological unrest dissipates,” President Lee said.

“Current financial market problems are rather psychological. The most formidable enemies are an excessive reaction to market conditions and the spread of unfounded fears. We should believe in our own potential capabilities and unite to tide over the hardship.¡°

He added, “In case of global slowdown of the real economy, the administration will drastically expand its fiscal role, increase budget spending, and take other preemptive measures to stimulate domestic consumption.”

“The government will increase investment in social infrastructure and support for small and medium-size enterprises and the service sector, which will create more jobs than other sectors.”

He also urged nonpartisan efforts from lawmakers, saying, “The government will provide 13 trillion won (nine billion U.S. dollars) worth of tax cuts to increase disposable income and facilitate investment.”

President Lee also requested extensive parliamentary support for his administration’s budget plan, asking to increase the budget sum while dealing with the budget bill.

On financial sector reform, he said, “Part of the problem lies in certain financial companies that still resort to expanding their business. But at the same time, we should be wary of financial practices only focusing on avoiding risk.”

He also announced a series of government measures to reform the financial sector, such as lowering entry barriers for companies in the financial market, removing restrictions on financial institutions, and strengthening the credit rating function and screening system for asset soundness.

“I asked for bipartisan parliamentary efforts to overcome the financial crisis for the remainder of the parliamentary session,” he said.

swpark@donga.com