Korea 1997

About Korea 1997

South Korea was pushed to the brink of sovereign default in December 1997. The Asian Financial Crisis had spread from Thailand to Indonesia and Korea. Korea had approximately 150 billion in short term foreign debt. Foreign reserves fell to 8 billion. The IMF provided a 58 billion rescue package, the largest in IMF history at the time. Korea agreed to painful restructuring including higher interest rates, fiscal austerity, and corporate governance reforms. Korean conglomerates called chaebols were forced to restructure. Daewoo collapsed in 1999. Korea repaid the IMF loan ahead of schedule in 2001. The crisis led to reforms that made Korea more resilient. Korea accumulated large foreign exchange reserves, exceeding 400 billion by 2024. The Korean experience transformed the IMF approach to crisis lending.