North Korea fired a senior communist party official who headed the country’s recent currency reform after the measure caused severe inflation, social unrest and starvation in some areas, reports said yesterday.
In late November, North Korea redenominated its national currency, the won, for the first time since 1959 as part of its efforts to resolve worsening inflation and reassert control over the country’s nascent market economy. The measure, however, reportedly sparked despair and frustration among many North Koreans left with piles of worthless bills.
It also “paralyzed” street markets that have sprung up in recent years and led prices to skyrocket, Seoul’s mass-circulation Chosun Ilbo newspaper said, citing a source in Beijing it did not identify.
The North’s power elite was embroiled in arguments over who should be responsible for the aftermath and Workers’ Party finance and planning department chief Pak Nam-gi, who spearheaded the currency revamp, was subsequently sacked, the paper said.
YTN television network carried a similar report, saying the country’s economic difficulties and food shortages have worsened following the reform, with people in the northeastern cities of Chongjin and Tanchon having died of starvation.
The network quoted sources it described as knowledgeable about the situation in North Korea, but did not identify them.
The situation is more serious in Tanchon, a home to magnesite mines where the authorities have recently suspended food rations, according to Good Friends, a Buddhist-affiliated group that sends food and other aid to North Korea. Agency official Lee Seung-yong said that one to two people have been dying of hunger every day there since late last month.
Dong Yong-sueng, a senior fellow at Samsung Economic Research Institute in Seoul, said the currency revamp was largely aimed at flushing out money traded on the black market to reinvest in the public sector. But inflation surged because the limited supply of goods in the state-run distribution system couldn’t keep up with demand. The problem was compounded by shortages in the remaining private markets.
“This kind of phenomenon was expected,” Dong said. “Logically speaking, it cannot help occurring,” he added, though he said he was not sure if the North Korean authorities had expected such a development.
South Korea’s National Intelligence Service chief Won Sei-hoon told a group of lawmakers last week that the currency change led to “riots in some places” in North Korea though the government now appears to have them under control, Seoul’s English-language JoongAng Daily newspaper reported on Tuesday, citing unidentified multiple sources.
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