Korea’s economic reform measures under the IMF program: government measures in the critical first six months of the Korean economic crisis

Korea f

s

Economi c

Reíor m Measure s

ưnde r th e

Progra m

Governmen t Measure s

i n th e Critica l Firs t Si x

Month s o f th e Korea n

Economi c Crisi s

Edited hy

Chan-Hyu n Soh n

Junso k Yan g

Kore a Institut e fo r Internationa l Economi c Polỉc y

Governmen t Measure s

i n th e Critica l Firs t Si x

Month s o f th e Korea n

Economi c Crisi s

Edited hy

Chan-Hyu n Soh n

Junso k Yan g

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Korea s Economi c Refor m Measure s

unde r th e IM F Progra m

Government Measures in the Crítical Fừst Six Months

of the Korean Economic Crisis

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Policy Paper 98-01

Korea' s Economỉ c Reíor m Measure s

Iinde r th e IM F Progra m

Governmen t Measure s i n the Crítỉca ỉ First Six Month s

o i the Korea n Economi c Crỉsis

Edited by

Chan-Hyun Sohn

Junsok Yang

June, 1998

KORE A INSTITUTE FOR

INTERNATIONA L ECONOMI C POLICY

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KOREA INSTITUTE FOR

INTERNATIONAL ECONOMIC POLICY (KIEP)

300-4 Yomgok-Dong, Socho-Gu, Seoul 137-800, Korea

Tét: (822) 3460-1125 Fax: (822) 3460-1133

URL: http://www.kiep.go.kr

Kyung-Tae Lee, President

KIEP Policy Paper

Published June 30, 1998 in Korea by KIEP

© 1998 KIEP

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Forewor d

By November 1997, the financial crisis thát had been tormenting Southeast Asia

since the summer oi thát year spread to Korea. The íoreign exchange difficulties

were quite unlike anything the vvorld had ever seen. The resultant economic chaos

is still being sorted out and the effects vvill likely be felt for years to come.

The crisis in Korea was touched off in November when a loss of confidence by

íoreign investors resulted in huge vvithdravvals of funds and a swift, massive

depreciation of the Korean won. In early December, the Korean government requested

the assistance of the IMF. The government and the IMF agreed ôn a program of

hindamental economic reíorms to curb the íoreign exchange crisis. In particular, the

reíorms aimed to eliminate some of the long-standing problems with the Korean

economy such as excessive regulations, inefficient íinancial sector, corporate

governance vvithout checks and balances, high levels of restrictions in trade and

capital flows, rigid labor markets, and non-transparency.

Át the same time, the government requested thát we, the Korea Institute for

Intemational Economic Policy (KIEP), establish the "Nation's Contìdence Enhancement

Team" vvhich, with the assistance of the Ministry oi Finance and Economy (MOFE),

would help restore íoreign investor contìdence in the Korean economy. Since the

biggest problem thát íoreign investors faced was the lack of iníormation about the

Korean economy, the team was to provide iníormation about economic reíorms and

restructuring. Iníormation covering reíorms and the cuưent economic situation was

compiled, summarized, translated, and placed át the "Korea's Economic Reíorm

Update" vvebsite within the KIEP homepage (http://www.kiep.go.kr/ENGLISH/ek￾iephome.html).

VVhile át times quality had to be sacriíiced for the sake of making material

available immediately, we are proud oi what the team has accomplished. Thereíore,

upon the completion of the project ôn May 8, we decided to publish their efforts.

This volume compiles the individual entries of the vvebsite. We believe this

compilation provides a unique insight into the critical first six months of Korea's

íinancial crisis, and will provide useíul background material to anyone interested in

early government responses to the country's íìnancial crisis.

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