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(LEAD) Lee spurns opposition's extra-budget proposal

All Headlines 11:10 March 11, 2010

(ATTN: UPDATES with experts' comments, background from 7th para)
By Lee Chi-dong

SEOUL, March 11 (Yonhap) -- President Lee Myung-bak on Thursday rejected the main opposition party's calls for supplementary budgets aimed at creating jobs, saying it is more urgent to cut wasteful spending, especially by local governments.

In a weekly emergency economic policy meeting launched to deal with the latest global financial crisis, Lee said his government is not considering an extra budget "under the current economic conditions," according to his spokeswoman, Kim Eun-hye.

Last week, the Democratic Party openly called for the government to allocate 5.5 trillion won (US$4.8 billion) for a supplementary budget to help create jobs.

"(The South Korean economy) seems to be on a steady recovery track, given the general trends of the macroeconomy," the president was quoted as saying. "But careful preparations are needed in advance against possible risks both internally and externally."

With regard to measures for job creation, the spokeswoman said, Lee asked small- and medium-sized firms to expand the employment of temporary "intern workers" under government subsidy and urged local authorities to reduce wasteful budgets that can be used for creating jobs.

The president also called on his economic policymakers to keep a close watch over foreign countries' moves, including China's move to expand its domestic demands and appreciation of its currency, Kim said.

Lee especially emphasized the importance of a sustained recovery in exports. South Korea, a major Asian economy traditionally dependent on exports, posted a trade surplus of US$2.33 billion in February, boosted by a constant rise in overseas demand.

Lee's comments came as the Bank of Korea kept the country's key interest rate 2 percent for the 13th straight month amid lingering economic uncertainties.

Experts pointed out that relatively rapid export growth is a positive sign for South Korea but the country should make more efforts to boost employment.

"The world economy is expected to continue to recover for the time being and the domestic economy is being adjusted as well. The South Korean economy is projected to show about 1 percent growth from the second quarter (of this year) compared with the previous quarter," Kim Joo-hyung, analyst at LG Economic Research Institute was quoted as saying in the emergency economy meeting.

South Korea reaped 0.2 percent growth in 2009 despite the global economic recession, ranking third among the OECD member countries after Poland with 1.7 percent growth and Australia 1.4 percent. All other advanced countries recorded negative growth.

Kim Ju-hyun, a researcher at Hyundai Research Institute, was upbeat about South Korea's economy in general, citing quick recovery of trade and facility investment but cited risks from sluggish recovery of consumption, deficits in service accounts and unemployment.


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