South Korea will release a preliminary plan in October to lay out how debt financing could help rebuild North Korea’s shattered economy after an eventual reunification, Seoul’s top financial regulator said Thursday.
The plan is part of South Korean President Park Geun-hye’s push to prepare for the possibility of reunification and assumes debt can be secured against North Korea’s natural resources and future growth.
“Reunification is really a political event,” Financial Services Commission Chairman Shin Je-yoon said in an interview at his office in downtown Seoul. “My job, in the business perspective, is how to develop North Korea. It really needs financing.”
Ms. Park has tried to rekindle cooling interest among South Koreans in reunification since taking office in early 2013. The Korean peninsula has been divided since the end of World War II. By some estimates, South Korea’s $1 trillion economy may be as much as 40 times the size of North Korea’s, which doesn’t release any economic statistics.
Ms. Park has labeled reunification an economic “bonanza” for both sides, although many South Koreans remain wary of the huge costs and social stresses that are expected to accompany such an event and its aftermath. North Korea has responded angrily in its state media to Ms. Park’s public statements on reunification, claiming that Seoul wants to topple the Pyongyang regime.
“Financing is the most important thing to develop to avoid having a big burden on South Korean people,” Mr. Shin said.
He said the draft plan would include an outline of how to secure financing from international institutions and the issuance of bonds in global markets. Some experts estimate North Korea has large untapped reserves of minerals and rare earths, although such deposits haven’t been proven.