WRAPUP 2-S.Korea revamps cabinet to fight crisis
Reuters - 1 hour 43 minutes ago
* President reshuffles ministers
* Changes finance minister and top regulator
* Markets show little reaction to reshuffle
By Yoo Choonsik
SEOUL, Jan 19 - South Korea's unpopular president replaced his finance minister and top regulator on Monday to counter criticism over the administration's handling of an economy slipping closer to recession.
Yoon Jeung-hyun, 62, who headed the country's top financial regulatory agency until last year following time at the Asian Development Bank, replaces Kang Man-soo as the Minister of Strategy and Finance.
Former vice finance minister Chin Dong-soo replaces Jun Kwang-woo as the chairman of the Financial Services Commission, the presidential Blue House said in a statement.
Seoul financial markets showed little reaction to the cabinet reshuffle.
South Korea's policy makers have scrambled to fend off the global financial storm that blew up in September last year with the collapse of Lehman Brothers.
Market liquidity has tightened and economic growth in Asia's fourth-largest economy has slumped along with that of its neighbours.
President Lee Myung-bak enters his second year in office next month and has been widely criticised for failing to do more to lift the economy after winning majority support in the 2007 election partly on a platform of economic reform.
Some economists, such as Oh Suk-tae at Citigroup, doubted a few new people could do much to fight a crisis that began overseas, while others, including Lim Ji-won at JPMorgan Chase, welcomed Yoon's appointment, which was flagged in media reports.
"I think this is positive in a general sense," Lim said, whose comments were made after the media reports and before the official announcement.
"Mr Yoon has a good reputation for his sense of financial sectors and international relations as well as his strong leadership," Lim said.
President Lee Myung-bak also named as his Unification Minister an academic who is considered the architect of the administration's hardline policy on the communist North.
Hyun In-taek, a professor at Korea University, aided Lee in drawing up the policy calling on the North to abandon its nuclear arms ambitions and open up to the international community in return for massive economic aid.
In other changes, Kwon Tae-shin, former vice finance minister, was appointed head of the prime minister's office and Yoon Jin-sik, a former commerce minister and vice finance minister, was appointed chief presidential secretary on the economy.
The changes come as President Lee has seen his approval rating hover barely above 20 percent as the economy slides closer towards recession.
The central bank has forecast 2009 economic growth at 2 percent, but an increasing number of global investment banks are predicting the economy would contract for the first time in 11 years, by as much as 3 percent.
Underlying the gloomy economy, central bank data on Monday showed that the ratio of business start-ups to failures hovered near a four-year low in December while debt defaults hit a seven-month low in the same month.
On a broader front, the Seoul Economic Daily reported China, Japan and South Korea had agreed with the 10-member Association of Southeast Asian Nations to boost the size of a proposed emergency fund to fight financial crises to $120 billion from an originally planned $80 billion. [ID:nSEO298929]
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