South Korea Said in Debt Rollover Accord
International lenders Friday officially completed a plan to roll over South Korean short-term debt through March 31, a source close to the talks told Reuters. “It gives us the time to sit down and work out an agreement with the Koreans longer term,” the source said. U.S. Deputy Treasury Secretary Lawrence Summers had said South Korea needs to strike a deal with international lenders “as rapidly as practicable” to roll over its short-term debt and strengthen investor confidence. That could occur formally at debt rollover talks scheduled in New York next week involving a South Korean delegation and international lenders. The talks are aimed at rescheduling South Korea’s short-term debt of $92 billion.
In other developments:
* International Monetary Fund chief Michel Camdessus, after a meeting with Malaysian Prime Minister Mahathir Mohamad, applauded recent efforts by Malaysia to overcome the financial crisis, including cutting spending by 18% and lowering growth targets. Mahathir has described going to the IMF as a form of “economic colonialism” because of mandatory changes in the economy the IMF requires.
* U.S. Treasury Secretary Robert E. Rubin vowed Friday that the United States will not spend public money to bail out investors and bankers hit by the Asian financial turmoil.
* The Big Three auto makers are rethinking their expansion plans for Asia, turning their efforts more toward buying into local factories that have suddenly become cheap since the region’s currencies plummeted. Sales in Asia are falling, leaving less need to build new factories. At the same time, the dropping value of the Thai baht, the Indonesian rupiah and the South Korean won have made it cheaper for U.S. companies to invest in Asia.
* In its second round of layoffs in a month, auto importer Hyundai Motor America dismissed 33 employees at its Fountain Valley headquarters Friday in response to ongoing economic turmoil in South Korea. The company said it cut 22 middle management workers at its Hyundai Motor Finance Co. subsidiary, leaving the unit with 110 employees. Additionally, the parent import and distribution company fired 11 workers, leaving it with 423 employees, as part of an ongoing effort to slash operating costs.
In other trade news:
* U.S. and Japanese negotiators could agree next week on a aviation pact to increase the number of flights and airlines serving the two countries, all sides said. After a year of talks, both supporters and foes of a further opening of the $10-billion market see compromise emerging on key issues at a meeting in Washington starting Tuesday.
* The Clinton administration indicated that Paraguay and Bulgaria will be subject to trade sanctions unless they do more to protect U.S. films, books and computer software from copyright pirates. The administration also singled out Turkey, Brazil and Hong Kong for complaint under Special 301, the section of the trade law governing enforcement of copyrights and patents. The announcement, from U.S. Trade Representative Charlene Barshefsky, was made in advance of a broader annual review, expected in April, of U.S. trading partners’ protection of U.S. intellectual property.
