News Brief No. 97/27

News Brief: Camdessus Welcomes Conclusion of Talks with Korea on IMF Program

December 3, 1997

Michel Camdessus, Managing Director of the International Monetary Fund (IMF), said in Seoul on December 3:

"I am pleased to announce that the Korean authorities and an IMF team concluded discussions in Seoul today on a strong economic program that provides for a decisive and welcome response to the country’s present financial difficulties. The program comprises strengthened fiscal and monetary policies, far-reaching financial sector reforms, and further liberalization of trade and capital flows, as well as improvements in the structure and governance of Korean corporations.

"I will be asking the IMF’s Executive Board to support the program with a three-year stand-by credit in the amount of SDR 15.5 billion (about US$21billion), and will submit Korea’s request for such an arrangement for consideration by the Board later this week under the IMF’s emergency financing mechanism. The President of the World Bank has indicated the Bank’s readiness to provide up to US$10 billion in support of specific structural reform programs, in accordance with Bank policy. Similarly, the President of the Asian Development Bank has indicated his readiness to recommend to his Board to provide up to US$4 billion in support of policy and institutional reforms, within the framework of the Bank’s policy. At the same time, I expect a number of countries, including at this stage Australia, Canada, France, Germany,Japan, the United Kingdom and the United States, to be prepared, in the event that unanticipated adverse external circumstances create the need for additional resources to supplement Korea’s reserves and resources made available by the IMF and other international financial institutions, to consider--while Korea remains in compliance with the IMF arrangement--making available supplemental financing in support of Korea’s program with the IMF.This second line of defense is expected to be in excess of US$20 billion.

"Full implementation of Korea’s economic program will be essential to overcome a difficult period in Korea’s economic history, help adapt the Korean economy successfully to the globalized environment, and return the Korean economy to a path of rapid but more sustained growth. I am confident this program will also contribute to the needed return of stability and growth in the region."