S. Korea supports exit strategies sought in `internationally-agreed` ways

ISTANBUL, Turkey, Oct. 6 (Yonhap) -- South Korea's top economic policymaker
called Tuesday for the member countries of the International Monetary Fund (IMF)
to prepare exit strategies, but cautioned against premature implementation,
saying they should be done in "concerted" and "internationally-agreed" ways.
In a keynote speech at the 2009 IMF/World Bank annual meetings held here in
Istanbul, Finance Minister Yoon Jeung-hyun also emphasized the importance of
reforming the Washington-based lending organization to "effectively" respond to
fundamental changes in the international financial system.
"Exit strategies need to be prepared, but they should be implemented when
recovery becomes fully secured. The premature implementation of exit strategies
may impede the emerging recovery and cause the economy to fall into a double-dip
recession. Too late an implementation may give rise to market uncertainties and
bring about another bubble," Yoon said.
"In this regard, the strategies should be developed in a concerted manner based
on internationally agreed principles, and we should recognize that the scale,
timing and sequencing of implementation will vary across countries," he noted,
calling for the IMF to swiftly establish the criteria for those roll-back moves.
His remarks come amid brewing debate among major countries over how and when to
start withdrawing expansionary monetary and fiscal polices adopted to weather the
steep downturn caused by the collapse of the financial system in the U.S. last
year.
Earlier, the central bank of Australia decided to lift its key interest rate,
apparently becoming the first country among the major advanced and emerging
countries to start withdrawing stimulus measures.
Yoon noted that the global economy is showing signs of recovery thanks to
"unprecedented" international policy coordination, but it has just recently
emerged from the worst of the crisis and still has a long way to go before it
recovers fully.
He urged the world's countries to guard against protectionism and seek policy
coordination to bring the global economy back to its pre-crisis level.
"Sustainable and balanced economic growth should be pursued by our elaborated and
coordinated efforts. For the global economy to return to a pre-crisis level of
trend growth, we have to reject protectionism and develop orderly policy
coordination," he said.
Yoon demanded the IMF expand its resources through a quota increase of at least
100 percent to better respond to the economic crisis, while demanding more voting
rights be granted to under-represented countries within the organization.
"The IMF needs to secure sufficient resources to respond to the economic crisis
through a quota increase of at least 100 percent. Also, as agreed at the
Pittsburgh G20 Summit, at least 5 percent of IMF quota shares should be realigned
to under-represented countries based on the economic weight of member countries,"
Yoon said.
Meanwhile, Yoon emphasized continued interest in and increased support to
low-income countries that are suffering much from the economic crisis, even
though they are not directly responsible for the rout.
Seoul's finance minister expressed support for the IMF's recent decision to
strengthen measures for low-income countries and significantly increase the size
of loans provided to them.
"I would like to encourage member countries to actively participate in the
efforts by the IMF and the World Bank to increase financial resources for
assisting low-income countries," he noted.
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