South Korea Finances

Crisis-ridden South Korea decided today to seek an International Monetary Fund bailout package of about $60 billion, the largest such rescue in history. "We have decided to request IMF assistance," Yoon Jeung Hyun, an assistant deputy finance minister, told reporters. "We are discussing the size and conditions of such loans." President Kim Young Sam is expected to explain the decision in a national address Saturday.

South Korea will spend an additional $7.7 million to fight a prolonged drought threatening the rice harvest, officials said. The money, to be used for building irrigation channels and drilling wells, is in addition to $15.3 million spent earlier this year. The dry spell began in March and is also affecting impoverished North Korea. Weather officials say the rainfall total so far this year in South Korea is 8.4 inches--one-third below average.

A coalition of major international banks Thursday agreed to keep extending the due dates of South Korean loans until negotiators can finish devising a longer-term fix for the nation's financial crisis. The meeting, held at Citicorp's Manhattan headquarters, involved 18 commercial and investment banks, South Korean government officials and representatives of the International Monetary Fund, which has fashioned a $60-billion public-sector bailout for the cash-strapped nation.

South Korea said it will repay $2.8 billion of International Monetary Fund loans that come due this month to send a signal abroad that it is overcoming a foreign exchange crisis a year after being forced to seek a bailout from international lenders. South Korea said it will pay $1.8 billion on Dec. 18 and an additional $1 billion on Dec. 30, though the IMF said earlier this month the country could roll over the loans for six more months. The loans are part of a record $58.

South Korea's most powerful conglomerates, hearing alarm bells in the country's financial crisis, are paring down their aggressive expansion plans at home and abroad, corporate executives said Friday. Separately on Friday, Japan agreed to give the country financial help, but only on condition that South Korea assent to terms set for it in a proposed International Monetary Fund aid package.

Financial Market Opening to Be Gradual, Official Says: South Korea will give foreigners wider access to its financial market but the moves will be made gradually to protect domestic businesses, Assistant Finance Minister Lee Hwan-kyun said. Lee said at an annual conference of U.S. and South Korean business leaders last week that South Korea needs to be cautious in deregulating its bond market and liberalizing foreign exchange and capital transactions.

South Korea's current account in 1990 slid into deficit for the first time in five years and is expected to record another shortfall this year, the Bank of Korea says. The current account deficit was $2.1 billion last year, versus a surplus of $5.1 billion in 1989. The key reason was rising oil prices prompted by the Gulf crisis. Korea imports all its oil. The current account embraces trade and such non-trade transactions as financial services and tourism.

South Korean politicians of all stripes on Wednesday blasted visiting U.S. trade chief Carla A. Hills' hard-line demands, saying it will take further negotiations, not "Rambo-style" threats, to break the deadlock between the two nations. The mood in economic and political circles was increasingly hostile, and some accused Washington of trying to bully Seoul into abrupt, far-reaching reforms it could not accommodate.

International lenders Friday officially completed a plan to roll over South Korean short-term debt through March 31, a source close to the talks told Reuters. "It gives us the time to sit down and work out an agreement with the Koreans longer term," the source said. U.S. Deputy Treasury Secretary Lawrence Summers had said South Korea needs to strike a deal with international lenders "as rapidly as practicable" to roll over its short-term debt and strengthen investor confidence.

South Korea and its international creditors agreed late Wednesday to restructure $24 billion of South Korean bank debt, a big step toward restoring stability to the nation's financial system. The bank debt will be exchanged for South Korean government-backed loans due in one to three years. "Today's agreement is a key step toward Korea's goal of returning shortly to the international capital markets," said William Rhodes, vice chairman at Citicorp, one of the banks that led the negotiations.

International lenders Friday officially completed a plan to roll over South Korean short-term debt through March 31, a source close to the talks told Reuters. "It gives us the time to sit down and work out an agreement with the Koreans longer term," the source said. U.S. Deputy Treasury Secretary Lawrence Summers had said South Korea needs to strike a deal with international lenders "as rapidly as practicable" to roll over its short-term debt and strengthen investor confidence.

A coalition of major international banks Thursday agreed to keep extending the due dates of South Korean loans until negotiators can finish devising a longer-term fix for the nation's financial crisis. The meeting, held at Citicorp's Manhattan headquarters, involved 18 commercial and investment banks, South Korean government officials and representatives of the International Monetary Fund, which has fashioned a $60-billion public-sector bailout for the cash-strapped nation.

South Korean government officials had their first face-to-face meeting with international lenders here Monday on what was described as a three-pronged plan for protecting the Koreans against defaulting on loans at least through March. Chung In Yong, a former ambassador advising the incoming government of President-elect Kim Dae Jung, heard a range of proposals for managing the country's crushing short-term debt and raising $10 billion or more in new capital.

Signaling its approval of economic reforms in South Korea, the International Monetary Fund on Tuesday disbursed an accelerated $2-billion payment to the cash-strapped nation. The money is the IMF's share of a $10-billion emergency credit package that it and 13 industrialized nations assembled last week in an effort to ease South Korea's financial crisis.

The world's major industrial nations, pressed to act faster to alleviate South Korea's deepening financial crisis, announced Wednesday that they will speed up about $10 billion in already promised loans to help stabilize the country's financial markets and stem the outflow of dollars. The move came as the Japanese government also announced new steps to stabilize the ailing Japanese banking system.

The world's major industrial nations, pressed to act faster to alleviate South Korea's deepening financial crisis, announced Wednesday that they will speed up about $10 billion in already promised loans to help stabilize the country's financial markets and stem the outflow of dollars. The move came as the Japanese government also announced new steps to stabilize the ailing Japanese banking system.

The International Monetary Fund, its resources strained by the Asian financial crisis, is asking member countries to boost its capital base by $160 billion--almost double the amount they agreed upon in September. The request, outlined in an internal memo by IMF Managing Director Michel Camdessus, comes amid rumors that South Korea will require even more than the $21 billion the fund has promised under a $60-billion international rescue plan.

The World Bank approved a $3-billion loan for South Korea, the first installment of the bank's share of a $60-billion international bailout package. The loan, to help South Korea meet short-term debt repayment needs, is the largest ever made by the World Bank. "We regard this loan as a symbol of Korea's commitment to structural reforms that in time will help restore the health of a fundamentally sound economy," said James Wolfensohn, president of the World Bank.

Emboldened by signs that its currency may have hit bottom, South Korea scrapped controls on it starting today, allowing the much-weakened won to trade freely. The unexpected action and other market-liberalization moves, including an invitation to foreign investors to buy control of one of the nation's major banks, cheered investors and sent both the won and the stock market soaring in early trading today.