Seoul turn to IMF as crisis worsen

Seoul turn to IMF as crisis worsen

SEOUL (Reuters): South Korea sought yesterday a loan of some
$20 billion from the International Monetary Fund (IMF) to
overcome its deepening financial crisis and forecast a painful
period of restructuring for one of Asia's vaunted "Tiger"
economies.

"We accepted the advice from the IMF and our friendly nations
and we decided to ask for the IMF loans," Finance Minister Lim
Chang-yuel told a news conference.

"The size of the loans will be discussed. But the IMF and
ourselves think that $20 billion would be enough to solve the
difficulties," said Lim, who only took over as Finance Minister
on Wednesday after the abrupt resignation of his predecessor.

He said conditions of the assistance, including the size and
terms of the lending, would be determined by the IMF and the
participating countries. An IMF team would arrive next week to
discuss the details.

"I think we can get the loans three or four weeks after we
reach the agreement," said Lim, who once served as an IMF
executive director.

But he acknowledged there would be pain to go with the IMF
gains.

"On the other hand, the Korean economy is expected to undergo
a painful process of structural adjustment.

"The macroeconomic policies and fiscal operations are expected
to be constrained by the conditionality of the IMF assistance,
while the financial sector restructuring will be accelerated."

He appealed for public understanding.

"To overcome the current difficulties and future challenges,
the full cooperation of the people of Korea is called for," Lim
said.

He said he was also in touch with Japan about assistance but
declined to give details of those talks.

"I believe Japan is going to cooperate quite closely with us,"
Lim said.

Lim had a telephone conversation yesterday with his Japanese
counterpart, Hiroshi Mitsuzuka, said Eisuke Sakakibara, vice
minister for international affairs in Japan's Finance Ministry.
But Sakakibara said he could not comment further.

Lim's announcement followed talks he held earlier in the day
with visiting IMF Deputy Secretary General Stanley Fischer.

"The IMF and other allies have recommended Korea to seek a
financial assistance from the IMF in order to secure firm
stability in the financial market and to reinforce our reform
efforts," Lim said.

"The Korean government has finally decided to accept such a
recommendation," he said.

"Financial assistance from the IMF is typically extended to
countries in need of short-term capital. As in the cases of
Mexico, Thailand and Indonesia, the financial assistance from the
IMF will be accompanied by financial support from other
participating countries."

He said the IMF loans would stabilize the financial markets
"by improving Korea's international credit rating and clear the
liquidity shortage problem".

South Korea's financial crisis has been caused by a string of
corporate failures that have put enormous strain on the banking
system at a time when the won was plunging against the dollar.
President Kim was to address the nation on Saturday about the
country's economic situation.

South Korea's request for some $20 billion in help from IMF is
the latest plea to the world financial watchdog in a year that
has seen accelerating demand for IMF bail-outs.

Crisis -- Page 4

Bailout -- Page 10