IMF plays down fears of second S Korean fiscal crisis

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SEOUL, Sept 3 (AFP) The International Monetary Fund (IMF) today discounted fears of a second financial crisis in South Korea, saying the country's fundamentals are much stronger than in 1997. brFinancial markets have been spooked by fears of possible massive capital flight this month, when bonds held by foreigners and worth 6.71 billion dollars mature. brThe Korean won closed Wednesday at 1,148.5 to the dollar, down 14.5 won from Tuesday's close and the lowest level since October 7, 2004. brThe IMF said some parallels had been drawn to 1997 given the country's rising external debt, a weakening currency and the current account moving into deficit. brIt is important to emphasise that these similarities are largely superficial, and the fundamentals of Korea today are much stronger than 10 years ago, Meral Karasulu, the IMF resident representative in Seoul, said in a statement. brThe statement said much of the short-term foreign debt was linked to currency hedging by Korean exporters and investors abroad. brFurthermore, despite the recent increase, the outstanding external debt is still not unusually large when compared to Korea's export earnings or international reserves, or when compared to other countries in the region.