Korea Institute for International Economic Policy

(http:/www.kiep.go.kr)

Dr.Yunjong Wang (Tel 822-3460-1124), Dr.Hyoungsoo Zang (Tel 822-3460-1153)

NEWS RELEASE

A Comprehensive Report on Koreas Economic Reform

March 31, 1999

Adjustment Reforms in Korea since the Financial Crisis by Yunjong Wang and Hyoungsoo Zang is the first study of its kind in translation to introduce the myriad of facts and issues about the concurrent economic restructuring program in Korea since the 1997 financial crisis. In this report, Wang and Zang discuss major elements of the government policies for crisis resolution and economic recovery.

The study summarizes ways in which the Korean government and the IMF have come to build a partnership for rehabilitation and advancement of the national economy. Moreover, it tries to explain how the Korean government has formulated and implemented the necessary reform measures in consultation with the IMF, and how the measures have come to produce encouraging results despite the insecurity and risks present in the international financial market.

Here, Wang and Zang argue that there has been a continued understanding between the Korean business, labor, and the government on the strong need to move forward despite the presence of foreign skepticism. They move to argue that the consensus reached by the private and public sectors form a strong foundation for the future reform programs.

Furthermore, the dynamics of Korean industries and businesses in the post-reform era would significantly contribute to meet the competition and challenges from abroad. In the meantime, however, the Korean economy will have to perform on a continually improving basis, and sustain the pressure, and meet the expectations of the international speculators.

The study is organized so as to introduce and cover the nature, conditions, developments, and progress of the IMF Program in Korea. Moreover, it covers implementation plans for the future restructuring program and effects and assessment of the Korean economy under the Program. Under this broad scheme, the study puts forward detailed explanations of the Stand-by Arrangements, the concept of conditionality, performance criteria, and the macroeconomic and fiscal policies. Also covered are other various reform policies for the corporate and financial sectors, including trade and capital account liberalization, chaebol reform, stabilization of the foreign exchange market, and the improvement of Koreas external debt structure.

Finally, the study emphasizes the special role the international financial institutions must play in containing and preventing future crises, and suggests how the Korean government should act in order to develop institutional mechanisms for an effective control over the multiparty financial support network.