S. Korea allocates 4 tln won in reserve funds this year

SEOUL, Jan. 27 (Yonhap) -- The government said Tuesday it has allocated the
largest amount of reserve funds in six years for this year in a bid to better
cope with the turmoil in the real economy and financial sector.
South Korea has allocated 4 trillion won (US$2.87 billion) in reserve funds for
this year, up 74 percent from the previous year, according to the Ministry of
Strategy and Finance. It is the first time that the government has increased
reserve funds to the 4 trillion won level since 2003 when a credit card bubble
burst in South Korea.
"The government set aside over 4 trillion won in emergency funds to tackle
economic difficulties at home and abroad," a ministry official said. "In the case
of an emergency, the government could tap the funds immediately without the need
to seek for a supplementary budget."
The move comes as the South Korean economy is losing steam more sharply than
expected amid tumbling exports and weak domestic demand. Asia's fourth-largest
economy shrank a larger-than-expected 5.6 percent last quarter from three months
earlier, the sharpest fall since the Asian financial crisis a decade ago.
The Bank of Korea, the country's central bank, said last week that 2009 economic
growth may miss its earlier forecast of 2 percent. Many economists say economic
growth will likely fall to the 1-percent range this year with some expecting a
recession for the first time in more than a decade.
sooyeon@yna.co.kr
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