The paper, the Australian, quoted Kim in an interview published on Saturday as saying the IMF had provided South Korea with great help, but he also described some of its policies as being inadequate.

``Especially they wanted too much austerity and too high interest rates,'' he told the paper.``We have recognised this, so we are now making adjustments to policy,'' he added.

South Korea was forced to turn to the IMF last year for a record $58.35 billion bail-out package at the height of a financial crisis which brought it to the brink of national default.But financial analysts said the forced belt-tightening was doing more harm than good in a country where domestic consumption takes up more than half the gross domestic product.

The South Korean media reported earlier this month thatinflation-adjusted consumption by urban workers dropped 19.7 per cent in the second quarter of this year from 1997, the biggest quarterly fall in 35 years.

Last week, Daewoo Research Institute, a think-tank, said domestic consumption during the first half of this year plunged 28per cent from a year ago, the steepest drop among Asian countries hit by a foreign exchange crisis.

Wholesale and retail sales, a private consumption indicator, dropped 8.5 per cent in the second quarter of 1998 versus a 5.9 per cent rise the previous year, figures from the central Bank of Korea said.

In last-ditch attempt to boost consumption, the finance ministry said on Saturday it would expand consumer financing immediately by providing 7.31 trillion won ($5.28 billion) in credit through banks and public funds.The ministry said it would make 3.65 trillion won in cheaper loans available to house buyers through banks and public funds while using 500 billion won for buying unsold apartments and homes to be rented out later.

Itwould also extend 3.16 trillion won in credit to individual consumers and businesses through local banks to encourage spending on durable goods such as cars and electronic appliances.

Some of the credit would be used to provide loan payment guarantees for local retailers and to buy bonds issued by credit card firms and other short-term lending institutions to ease a severe credit crunch, the ministry said.

On Thursday, South Korea's cabinet approved a plan to hike up South Korea's 1999 state budget deficit to 22.1 trillion won in order to pump more money into the depressed economy next year.The central Bank of Korea already lowered the rediscount rate by 200 basis points to three per cent in late August, a step aimed at helping smaller companies gain financing.

South Korea is scheduled to hold its third quarterly review with the IMF next month to discuss future policy direction, including possible interest rate cuts and increased public spending.