Korean banks in technical default’

WASHINGTON, Jan 13: South Korea’s banks are now in "technical default" on billions of dollars of loans that have been extended twice by international lenders, leading credit rating agency Moody’s investors has said. The agency said at a conference with investors that South Korea’s fragile financial position could "prolong the forced rollover period". Moody’s downgraded South Korea’s economy below investment grade to "junk" status on December 22.

"The rollover effort has never been as smooth as some bankers and regulators have tried to portray publicly. Many banks are not prepared to dig deeper positions in South Korea and would rather walk away from a problem that they helped create", the New York Times noted. Meanwhile, house ways and means committee chairman Bill Archer and leading Republican Jack Kemp, the unsuccessful vice-presidential candidate in the last election, have joined the doubters over the IMF bailout. Asked if the Congress would approve the $ 18 billion President Clinton is seeking for IMF’snew arrangements to borrow and, Archer said on NBC-TV: "I think it is still an open issue." Kemp said that the IMF helped cause the present mess in east Asia by encouraging devaluation. He said: "Asia is in a meltdown, a currency meltdown.

Stabilizing the currency is the single most important thing we can do to help them."

President Clinton’s national security adviser, Samuel R Berger, however, supported the IMF’s belt-tightening requirements. "The most important thing that could happen," he said, "is full compliance with those economic reform efforts."