Official says NKorea’s private markets closed briefly due to currency reform but no upheaval

Thursday, April 1, 2010

NKorea says no chaos followed currency reform

PYONGYANG, North Korea — North Korea’s private markets closed temporarily due to a delay in setting prices after a currency redenomination, but the economy has stabilized and markets reopened, a senior economist said in a rare interview broadcast Thursday.

The researcher denied reports of social upheaval because of the abrupt change in December, which analysts saw as an effort to cool inflation and reassert the communist government’s control over a growing market economy. The measure reportedly sparked anger among many citizens stuck with piles of worthless bills.

“In the early days immediately after the currency change, market prices were not fixed, so markets were closed for some days,” Ri Ki Song, a professor at the Institute of Economy at North Korea’s Academy of Social Sciences, told APTN. “But now all markets are open, and people are buying daily necessities in the markets.”

Ri was provided by the North’s government in response to a request to talk to an official who could explain its economic situation. It is very rare for North Korean officials to discuss such policies with foreign media.

Impoverished yet nuclear-armed North Korea has in recent years allowed some free markets for food and consumer items, while others not sanctioned by the state have also sprung up as the public copes with declining living standards and food shortages.

“Outside Korea, many people have been talking loudly about problems that occurred during the change of currency in our country, but there wasn’t any of the social disorder that they have been talking about,” Ri said. “Now the situation is being stabilized overall, and the economy is functioning well, thanks to some of the measures that have been taken.”

Ri insisted the government’s objective is to phase out markets completely and rely on a state-controlled network of outlets to supply its citizens.

“Markets will be removed in the future, by reducing their numbers step-by-step, while continuously expanding the planned supply through state-run commercial networks,” Ri said. “This is our official position on markets. Now, markets are used as a subsidiary means to offer convenience in peoples’ daily lives.”

South Korea’s Yonhap News Agency reported last month that a North Korean official was executed by firing squad as punishment for the upheaval that surrounded the bungled currency redenomination.

And South Korea’s Chosun Ilbo newspaper reported in February that North Korean Premier Kim Yong Il apologized for the aftermath of the reform in a meeting with government officials and local village leaders.

The paper, citing an unidentified source in North Korea, said Kim acknowledged the currency revamp was implemented without sufficient preparation.

North Korea has set an objective of achieving the status of a “powerful and prosperous nation” in 2012, the 100th anniversary of the birth of the country’s founding leader, Kim Il Sung.

As part of attempts to revitalize the economy, North Korea announced last month the establishment of a new State Development Bank.

The bank will work in partnership with another North Korean financial body — the Taepung International Investment Group — to try to overhaul the economy, according to Pak Chol Su, a deputy director-general at the bank and president of the investment group.

“We have to find a solution for the infrastructure, railways, roads, ports and airports and electric power, and the issue of energy, which are most important for Korea,” he said in a separate interview with APTN. “These are the objectives, which we should accomplish, all at the same time, within five years.”

Pak, sitting in front of a computer at his desk, outlined ambitious plans for a country with a gross domestic product estimated by South Korea’s central bank at just $25 billion in 2008.

“If we achieve the construction of this infrastructure, electricity, agriculture, energy, and the building of eight industrial regions mentioned in the five-year plan, then over a 10-year period, the total extent of investment will be about $500 billion,” he said.

Lee Sang-man, a professor of economics at Chung-Ang University in South Korea, dismissed such a figure as “nonsense,” but said the interviews given by Ri and Pak were significant.

“There has been much talk about the regime collapsing and they wanted to show that the rumors are groundless, that they’re stable,” Lee said.

will not be displayed