DPM Han to Attend
IMF/World Bank Meeting
Participates in IMFC/DC as Korea becomes one of the board member countries
A Korean delegation, headed by Deputy Prime Minister and Finance and Economy Minister Han Duck-soo, left for Washington Sept. 22 to participate in the upcoming 60th Annual Meeting of Board of Governors of the International Monetary Fund and World Bank Group (IMF/WB), slated for September 24-25. The delegation includes the Bank of Korea governor and heads of commercial banks.
Finance ministers and central bank governors from the 184 member countries of IMF/WB get together for the annual meeting to take up such topics as IMF quota review and the write-off of debts for the poor countries, which was discussed during the previous G-8 finance ministers?meeting.
DPM Han will attend the International Monetary & Financial Committee, Development Committee (IMFC/DC), decision-making bodies of the IMF and the World Bank Group, as Korea becomes one of the 24 board member countries of the international financial institutions for the first time since its entry into IMF/WB 50 years ago.
Korea is under-represented in the voting power in IMF decisions, which is determined by each member country's quota. The nation has a 0.77 percent share of the total quotas, ranking 28th among the 184 member countries.
The Board of Governors of the International Monetary Fund and the Boards of Governors of the World Bank Group normally meet once a year to discuss the work of their respective institutions. The Annual Meetings, which generally take place in September-October, have customarily been held in Washington for two consecutive years and in another member country in the third year. The Inaugural Meeting of the Boards of Governors was held in Savannah, Georgia, USA in March 1946. The first annual meetings were held in Washington starting in 1946.
At the Annual Meetings, the Boards of Governors make decisions on how current international monetary issues should be addressed and approve corresponding resolutions. A Governor of the Bank and the Fund chairs the Annual Meetings, with the chairmanship rotating among the membership each year. Every two years it elects Executive Directors. Each year any new members are welcomed into the Bank and Fund.
Because the Annual Meetings bring such a large number of member country officials together, they provide opportunities for consultations large and small, formal and informal. Numerous seminars are held in conjunction with the meetings, including seminars conducted by staff members for members of the press. The Annual Meetings Program of Seminars is designed to foster creative dialogue among the private sector, government delegates and senior Bank and Fund officials. The Per Jacobsson Lecture on international finance, which is sponsored by a foundation set up in honor of the Fund's third Managing Director, is also given each year in conjunction with the Meetings.
In the meantime, Rodrigo de Rato, managing director of the International Monetary Fund (IMF), forecasted on September 7 that the Korean economy will grow at around 4 percent this year and about 5 percent next year. The IMF head made the prediction in Seoul prior to his participation in the 12th APEC Finance Ministers?Meeting held in Jeju on the 8-9 of September.
Rato stressed that Korea should maintain fiscal and monetary policies designed to back up growth, saying that it's still too early to raise interest rates. He made the remark during a meeting with reporters after he met with Bank of Korea Gov. Park Seung.
The Korean economy is on the recovery stage in several sectors, and particularly, rising spending by the household sector is taking the lead in growth, Rato said. As a result, he said that the Korean economy is projected to grow around 4 percent this year and 5 percent next year.
He said he backed Korean financial authorities?flexible exchange rate policy supportive of domestic growth and monetary policies should be directed toward growth and now is not the time for Korea to raise its interest rates.
Rato emphasized the need for accelerating structural reforms to help Korea attract new investments and putting more priority in raising the flexibility of the domestic labor market in order to induce investments and create more high-quality jobs.
In an effort to improve the flexibility of the labor market, he said, Korea is required to reduce the high protection of regular workers and expand the social safety net of the vulnerable, temporary workers on short-term contracts.
DPM-Minister of Finance and Economy Han held bilateral talks with the visiting Managing Director of the World Bank Group Shengman Zhang at the Jeju Shilla Hotel on Sept. 7 on the sidelines of the APEC Finance Ministers?Meeting.
DPM Han expressed the hope that the World Bank Group will hire more Korean employees so as to help Korea beef up its activities aimed at supporting the developing countries.
Zhang said that he had an experience of hiring employees from Korea, Thailand and Malaysia, and their ability and performance were rated to be excellent. He suggested an idea of recommending to the World Bank Group specialized manpower from both public and private sectors, saying that the Asian countries have not yet built up a systematic network for hiring manpower, and recruitment of employees should be based on market principles.
12th APEC Finance Ministers'Meeting
12th APEC Finance Ministers?Meeting was held on September 8-9 in Jeju under the chairmanship of Korean Deputy Prime Minister and Minister of Finance and Economy Han.
With consent from all member economies, the Joint Ministerial Statement was adopted together with the "Jeju Declaration on Enhancing Regional Cooperation against the Challenges of Population Ageing,"as proposed by Korea.
The Finance Ministers reiterated that all member economies have a shared responsibility to address major risks to the global economy such as the global imbalance and high oil prices.
They reaffirmed the importance of liberalization in trade and investments to promote continued progress toward the Bogor Goals and reiterated their support for the successful conclusion of the WTO Doha Development Agenda negotiations.
The 2005 Finance Ministers'Process sought joint measures on two policy themes: "Free and stable movement of capital"and "Meet the challenge of aging economies."Regarding the former, the Ministers agreed on the need to continuously promote it. For the latter, the "Jeju Declaration"was adopted to address the challenges that could be brought by an aging population. Under the Jeju Declaration, an "Expert Group"of research experts from each member economy will be created at the next Finance Ministers' Meeting to suggest fiscal and financial policy recommendations.
Also, the "APEC Finance Ministers' Statement on Remittances"was adopted to encourage the establishment and the use of official remittance channels. Furthermore, it was agreed on the four priority areas of governments' efforts, namely to strengthen the availability of data on remittance flows, strengthen or modernize domestic financial infrastructure, ensure appropriate oversight of remittance service providers, and to expand financial literacy programs.
The Finance Ministers agreed on the need for a stronger consultative mechanism between oil exporting and importing countries via the International Energy Forum and G-20 to cope with oil price hikes.
They shared a view on the need for Northeast Asian regional development as a joint project. Toward this, they showed a positive response to the suggestion to invite North Korea to next year? meeting. They, however, cited as preconditions a progress in the North's nuclear issue and consensus among member economies on the invitation.
The 13th APEC Finance Ministers'Meeting will be held in Hanoi in 2006.
Per Capita GNI
Deputy Prime Minister-MOFE Minister Han predicted that Korea's per capital gross national income (GNI) could reach $20,000 around 2008 when the current government's term ends.
He made the forecast August 23 as he met with reporters to brief economic operation performance of the Participatory Government's two and half years. the mid-point of President Roh Moo-hyun's five-year term.
The government will consistently push for a more transparent economic system, business-friendly environment and improved labor-management relations, he said.
DPM Han also mentioned that government R&D investments in science and technology will be expanded continuously and institutional reshaping for the financial sector will speed up with the goal of building a Northeast Asian financial hub of Korea.
Pointing to weak domestic consumption as the biggest challenge during the two and half years, he said the 2-year-long slump in domestic consumption has decelerated the GDP growth rate by 0.8 percent point.
Meager improvement in labor-management relations, delayed restructuring of small and medium enterprises (SMEs) and weak competitiveness in the service industry were cited as critical problems to resolve.
The finance minister said the Participatory Government has made remarkable progress in improving corporate governance and accounting practices through legislation on upgrading the accounting system and introducing class action law. He also mentioned that labor-management cooperation would truly materialize only when corporate transparency is achieved. nw
Deputy Prime Minister and Finance and Economy Minister Han Duck-soo