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17. Outline of the Economic Program for South Korea (As of May 19, 1998)

17. Outline of the EconomicProgram for South Korea (As of May 19, 1998)



I. Outline of IMF Arrangement

Stand-By Arrangement

Scale : 15.5 billion SDR

(Approx. $21.0 billion, equivalentto 1,939% of quota)

Period : Three years, beginning inDecember 1997

Disbursements:

Date of Board Meeting
Amount of Disbursement
1
Dec. 4, 1997
$5.5 billion (4.1 billion SDR)
2
Dec. 18, 1997
$3.5 billion (2.6 billion SDR)
3
Dec. 30, 1997
$2.0 billion (1.5 billion SDR)
4
Jan. 8, 1998
$2.0 billion (1.5 billion SDR)
5
Feb. 17, 1998
$2.0 billion (1.5 billion SDR)



II. Specific Policies

Monetary Policy

  • Raising short-term interest rates to stable market levels

Fiscal Policy

  • Expanding the tax base to increase tax revenues
  • Spending cuts for low-priority infrastructure projects

Financial Sector Reform

  • Restructuring and/or recapitalization of troubled financialinstitutions

Structural Reform

  • Trade liberalization through the elimination of subsidiesand other measures
  • Liberalization of restrictions on foreign capital by allowingforeign financial institutions to establish banking subsidiariesin South Korea, and other measures



III. Outline of ProgramReinforcement

  • Intensification of restructuring the financial system
  • Acceleration of capital account liberalization
  • Strengthening monetary policies to stabilize the exchangerate
  • Promoting trade liberalization



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