By Yoon Ja-young
Staff Reporter

Korea, in a fierce battle to survive the global financial and economic crash, seems to be haunted by another ghost. Concern that it might seek help from the International Monetary Fund (IMF), which gained momentum from a series of negative reports by foreign media, is driving people to a state of fear.

The government, however, continued saying that the concern is exaggerated judging from the ample foreign exchange reserve.

A report by the Wall Street Journal Friday rattled the country. It said the IMF is planning to help countries cope with the global financial crisis by providing unconditional loans. ``The kinds of countries the IMF has in mind are those such as Mexico, Brazil, South Korea and Eastern European nations that don't have big current-account deficits,'' the newspaper said. The report made Koreans shudder over the nightmare a decade ago when it was under a bailout program by the global fund.

Indeed, figures show that there is something wrong with Korea, which marks its eighth month under President Lee Myung-bak who pledged to save the economy.

The Korean won, which traded at around 940 won in January, fell to 1,440 won, being one of the biggest losers among currencies around the world. The credit default swap (CDS) premium, which reflects the country's bond default risk, rose to over six percent, higher than those of Thailand and Malaysia. It is similar to Turkey, which is about to seek the IMF's bailout package. The stock market already crashed to half of last year's peak.

The ministry, however, made it clear that it has no plans to get short-term liquidity support from the fund. ``Korea has $240 billion in foreign exchange reserve as of September 2008, which is enough to cope with external changes,'' it announced. The ministry added that it asked the IMF to correct the Wall Street Journal's report. The $240 billion foreign exchange reserve is bigger than the IMF's $200 billion fund that supports countries in trouble. Another official said having the sixth largest foreign exchange reserve country going bankrupt doesn't make sense. The government expects the foreign exchange market to ease as the current account turns to a surplus in October.

Daishin Securities said countries that sought the IMF bailout package have things in common _ current account deficit, lack of foreign exchange, and excessive short-term foreign debt. The ratio of short-term debt to foreign exchange reserve is high at 68.1 percent as of June, however, it is still much lower than the 264 percent it was before the Asian financial crisis.

IMF Pacific regions executive director Richard Murray told Yonhap News Agency that Korea's economic fundamentals are much stronger than they were 10 years ago. He said the dollar currency swap, which does not necessarily aim at Korea, is to cure short-term liquidity problems in sound economies, unlike a bailout package, which is for countries with troubles in accounts, finance and macro economy. IMF also positively evaluated the government's recent moves, saying, ``The policy package should support confidence in the Korean financial system and return attention to Korea's solid macroeconomic fundamentals, including its sizable foreign reserves."

chizpizza@koreatimes.co.kr