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S.Korea Announces Higher Debt

South Korea says it is planning to carry a record-high national debt next year, but officials say there is nothing to worry about. The credit rating agency Standard & Poor's is giving a thumbs up to 18 Asian banks based on the government support they receive.

South Korea plans to dig deeper into its pockets next year. The Planning and Budget Ministry here in Seoul has unveiled a $270 billion budget for the year 2006. That is a national record, and an almost 13 percent increase from last year.

Planning and Budget Minister Byeon Yang-kyoon says the government plans to spend more on research and development, economic stimulus programs, and improving social welfare. He acknowledges the debt is a record 32 percent of gross domestic product.

Mr. Byeon says South Korea's debt level is far below the average national debt ratio of more than 76 percent, recorded by the Organization for Economic Cooperation and Development. He adds that the ratio is expected to slowly decrease in the years ahead.

South Korea is one of four Asian economies where major banks are getting a favorable nod from Standard and Poor's. The credit rating agency says it is upgrading a total of 18 banks in South Korea, Malaysia, Taiwan, and Thailand.

S and P says those governments have demonstrated a record of coming to the aid of the banks since the 1997 Asian financial crisis. The agency also expressed confidence the four governments would maintain their policies to protect against banking failures.

China's third largest lending institution is expected to go public in October. Chinese state media report China Construction Bank, or CCB, is expected to put a 12 percent stake on the market in Hong Kong on the 27th or the 28th.

Morgan Stanley and Credit Suisse First Boston are underwriting the initial public offer, which is expected to raise between $4 billion and $8 billion. China is gradually selling stakes in some of its state-owned banks - a move economists expect will create more transparency in the country's lending system.

Two major Asian airlines are heading to Thailand. In Seoul, Korean Air says it will resume weekly flights to the Thai resort island of Phuket for the first time since it was hit by a massive tsunami in December.

Malaysia's AirAsia says it is introducing daily service from Kuala Lumpur to the northern Thai city of Chiang Mai in late October. The low-cost carrier also plans daily service from the Malaysian capital to Cambodia starting November first.