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South Korea Pays Off Debt to IMF
South Korea paid off the last of its debt to the International Monetary Fund on Thursday, closing a chapter in the 1997-98 Asian crash that forced one of the world's biggest economies to appeal for a foreign bailout.
The $140 million payment closed out the $19.5 billion loan two years and 10 months ahead of schedule, said Yoon Dae-hee, a spokesman for the Ministry of Finance and Economy.
"We've retaken our economic sovereignty," Yoon said. "From now on, we no longer need prior consultations with the IMF in planning and executing our economic policies."
Still, many analysts say South Korea's economic troubles are not over and that corporate restructuring has a long way to go.
South Korea recently adjusted its growth forecast for this year from 5% to 3% amid a drop in exports and the U.S. economic slowdown. Its economy grew 10.7% in 1999 and 8.8% in 2000.
"The crisis is not over," said Rhee Namuh, a senior analyst at Samsung Securities Co.
"The government has succeed in repaying IMF, but failed to strengthen the country's economic structure to ensure sustained growth," said Jun Min-kyu, an analyst at LG Investment & Securities Ltd.
South Korea was hit by a severe liquidity crisis in late 1997, forcing the country to appeal for a record $58 billion, IMF-led bailout package.
The recession was triggered when Thailand devalued its currency and set off a chain reaction across the region. Thousands of financially weak companies in South Korea collapsed. Unemployment soared in a nation where workers were accustomed to lifetime jobs.
South Korea used only $30.2 billion of the international aid package, including $19.5 billion from the IMF. It has already paid back all loans drawn from the World Bank and other international financial organizations.
South Korea's foreign exchange reserves, which dwindled to $8.87 billion in late 1997, now stand at nearly $97.8 billion. That makes a repeat of the currency instability of a few years ago highly unlikely, analysts say.
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