SEOUL (AFP) – South Korea’s top financial regulator said Wednesday that developing North Korea’s moribund economy in the wake of eventual reunification would cost around $500 billion.
Financial Services Commission (FSC) chairman Shin Je-Yoon told a seminar in Seoul that the estimate covered a period of 20 years that would be needed to raise the North’s per capita GDP from the current $1,251 to $10,000.
The FSC stressed the figure of $500 billion was open to revision and should not be taken as an official government position, but rather a starting point for discussion.
A survey released by the Unification Ministry earlier this year showed that while 70 per cent of South Koreans support the idea of a unified peninsula, almost half have no interest in helping cover the massive financial cost.
The FSC estimate noted that the South’s GDP was more than 40 times greater than the North’s in 2013, compared to the near 10-fold difference between West Germany and East Germany at the time of their reunification in 1990.
Shin said half the needed funds could be bankrolled by public finance institutions in the South such as the Korea Development Bank and Korea Exim Bank.
The other half could be financed by commercial banks, tax revenues from development projects in North Korea and international organisations such as the World Bank, he said.
Forecasting the cost of unification is an almost meaningless task, given the large number of possible scenarios under which a merger might occur.