[2020 National Audit] One-Third of IMF Public Funds 168.7 Trillion Won Not Recovered

Assemblywoman Yang Kyung-sook Points Out Issues at Ministry of Economy and Finance's National Audit

Source=Office of Representative Yang Kyung-sook, submitted by the Financial Services Commission

[Sejong=Asia Economy Reporter Kim Hyunjung] It has been pointed out that about one-third of the public funds used during South Korea's IMF foreign exchange crisis have yet to be recovered.

On the 7th, at the Ministry of Economy and Finance's audit held at the Government Sejong Complex by the National Assembly's Planning and Finance Committee member Yang Kyung-sook of the Democratic Party of Korea, concerns were raised about the sluggish recovery rate of IMF public funds, and related countermeasures were urged.

According to data received by Representative Yang from the Financial Services Commission, 168.7 trillion won was supported to the financial industry including banks, securities, and insurance during the IMF bailout. As of the end of August this year, the recovery rate was 69.5%, amounting to 117.2 trillion won, confirming that 51.5 trillion won has not been recovered.

Furthermore, the Financial Services Commission analyzed the prospects for recovering support funds by selling stocks of companies supported by public funds held by the Korea Deposit Insurance Corporation. Based on the valuation as of the end of June, it was only 5.1 trillion won, indicating that realistically, more than 46 trillion won of support funds are difficult to recover.

Representative Yang Kyung-sook stated, "The Audit Board has pointed out moral hazards and lax management such as unfair bonuses, parachute appointments, and improper fund creation by management in some companies where public funds were injected with taxpayers' money." She also criticized the Ministry of Economy and Finance for showing reluctance in allocating emergency disaster relief funds to support the struggling low-income economy due to COVID-19. She added, "Proper recovery of public funds should have minimized government bond issuance when preparing supplementary budgets due to the COVID-19 crisis," and said, "Additional recovered funds should be used to support the low-income economy, such as debt relief for low-income households."

At the audit session, Representative Yang Kyung-sook pointed out to Deputy Prime Minister and Minister of Economy and Finance Hong Nam-ki, "It should be reminded that public funds are taxpayers' money, not free gifts to companies, and companies should be encouraged to fulfill their social responsibilities. For companies like Woori Financial Group whose management has improved and are generating net profits, measures to additionally recover support funds should be considered."

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