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N. Korea scraps special currency for foreigners

BEIJING, July 19 Kyodo

North Korea has decided to scrap its special currency for foreigners as part of reforms leading toward a market economy, sources familiar with North Korean affairs said Thursday.

The move, taken with the government's apparent scrapping of its socialist rationing system from the beginning of this month, means that foreigners in North Korea will change overseas money directly into local won.

During the late 1990s, Pyongyang introduced the special currency, which foreigners were expected to use in Pyongyang's hotels and a handful of shops in North Korea catering for foreigners.

In reality, however, the system was relaxed so that they generally paid for goods using dollars, yuan or other overseas currencies and received the special foreign currency as change.

Pyongyang reintroduced the green and blue colored special foreign currency to coincide with its staging in Pyongyang of the two-month Arirang festival, which wound up at the end of June.

North Korea's government promoted Arirang, a spectacular involving 100,000 participants, as a major tourist draw card with the hope of attracting foreign currency into the impoverished country.

According to the sources, Pyongyang's pivotal economic reforms require North Koreans to use the wages they earn to pay for food as well as housing rent, water and other utilities, provisions which the state was formerly obliged to provide for free.

They said the new policy, enforced since the beginning of July, has led to a sharp increase in wages and prices, which in some cases have risen more than tenfold.

While Pyongyang's apparent policy change indicates a move towards greater economic openness, North Korea watchers have warned that the elderly and others unable to work may suffer as food rations and welfare benefits disappear.

During the past few years, China has held up its own developmental path -- introducing free market economic reforms while maintaining strong political control -- as a reform role model for North Korea.

China scrapped its own special currency for foreigners by the start of the 1990s.

COPYRIGHT 2002 Kyodo News International, Inc.
COPYRIGHT 2002 Gale Group