IMF membership South Korea joined the IMF on August 13, 1955. The relationship between the state and the institution has been steady for the most part. The country contributed $8.582 billion
SDR (Special Drawing Rights) to the IMF quota, which comprises 1.81% of the IMF's funds. South Korea has 87,292 votes in the IMF, which is 1.73% of the total. As of recent, the IMF sent a team to Seoul to discuss the fiscal policy that is supposed to assist growth in the short and medium term.
The Asian Financial Crisis Intervention After the
Korean War in 1953, the
South Korean economy achieved sustained growth, but had accumulated an unseen amount of short term foreign debt. Korea was one of the last countries to be affected by the Asian Financial Crisis. The won dropped in value and a large investment panic in the state led to the eventual bankruptcies of chaebols that had borrowed huge amounts for their individual projects. In late November 1997, an IMF economist team was brought to Seoul to discuss a "bail out package" that was worth $60 billion and included several conditions that were to help restore the health of the country's economy. Other members of the World Bank and Asian Development Bank came to address the issues as well. The
bailout had conditions that forced Korea to go through restructuring policies and programs, such as new
labor market policies that allowed more flexibility in terminating employees.
South Korea signed the agreement with the IMF to address their deficients due to the
1997 Asian financial crisis. The structural provisions included: • increased flexibility of exchange rates • tightening of monetary policy • structural reform to remove features of the economy that would stunt growth • increased activity of foreign players in the domestic financial market Unemployment more than tripled from 2.05% in 1997 to 6.96% in 1999. South Koreans participated in a
gold collecting campaign in the hopes of paying off the loans. Approximately one-quarter of the nation's population participated in the campaign from all social classes, selling gold such as wedding bands and sports medals. $2.2 billion was raised from the gold campaign. Showing how countries have saved up more reserves since 1997. South Korea has not borrowed from the IMF since the 1997 crisis. According to the
Organization for Economic Co-operation and Development (OECD), South Korea's reserves have increased from 21.556 billion
SDR in 1997 to 247.759 billion SDR in 2014. As a result of the increasing complexity in world financial systems, South Korea joined the
CMI (Chiang Mai Initiative materialization). The CMI is an agreement between Southeast Asian countries to use each country's respective foreign reserves to stabilize the region's economies in case of an emergency. The agreement helps to prevent
financial contagion and is a safeguard against market panic. The agreement is not enforced and has never been used. Parties include
South Korea,
China,
Hong Kong,
Japan,
Indonesia,
Malaysia,
Philippines,
Singapore,
Thailand,
Vietnam,
Cambodia,
Myanmar,
Brunei and
Laos. The agreement allowed these nations to stop hoarding
foreign reserves, which could theoretically help their economies grow, increase trust among foreign investors for local currencies, and act as a safety net. == In popular culture ==