The government is being criticized for easing conditions on loans funded from the inter-Korean cooperation funds that were given to the Korea National Tourism Organization for Mount Kumgang tour projects. On Monday, the government decided to lower the interest rate on a loan given to the organization in June 2001 by 2 percent.
The organization originally received a loan of 90 billion won ($93.7 million) with an interest rate of 4 percent and repayment over a five-year period, after a three-year deferment. However, the payback period has now been extended to 10 years at an interest rate of 2 percent.
The Unification Ministry said yesterday that the organization asked the government to make changes to the conditions of the loan, arguing that under the tours’ current profit structure it was unable to repay the funds. This request was acceded to.
The ministry said that after an accounting firm had reassessed the loan, the decision was made with all relevant government organizations involved agreeing to make changes to its conditions.
Nevertheless, the argument that the profit level is too low for the organization to make its payments seems weak as the number of tourists taking trips to the North’s Mount Kumgang has increased over the years.
Only 57,000 people made the trip in the year the loan was granted but by last year the number of visitors had increased to 301,000.
The organization paid the 90 billion won to Hyundai for operating rights to the Kumgang hot springs and resort. Hyundai made a payment of 29 billion won to the North, for which it had been in arrears.
In response, some civic groups argued that public funds should not be used to finance such projects in the North.
