South Korea to fully repay IMF loan soon

South Korea to fully repay IMF loan soon

SEOUL (AFP): South Korea will have fully repaid an emergency bailout loan, worth about US$20 billion, to the International Monetary Fund (IMF) this month, the finance and economy ministry said Thursday.

The repayment of $440 million -- the final part of the IMF loan yet to be repaid, will be settled on August 23, the ministry said.

South Korea had to borrow a total of $19.5 billion from the international financial institution to overcome its foreign reserve shortages right after the 1997 financial crisis in Asia.

The full repayment is originally set to be made in May 2004.

"The earlier-than-scheduled settlement would contribute to boosting the confidence in South Korea's economy by sending a message that the country has fully overcome 'the IMF crisis'," the ministry said in a statement.

Seoul's Yonhap news agency hailed the move and said it would mean a return of the country's "economic sovereignty" in being free from IMF policy interventions.

In return for the bailout package, the IMF has held regular consultation meetings with South Korea to advise on the country's key economic policy.

The IMF arranged a total of $58 billion in a promised rescue package, which was also backed by the Asian Development Bank (ADB) and the International Bank for Reconstruction and Development (IBRD).

But South Korea has used $30.2 billion of the emergency international loans -- $19.5 billion from the IMF, $3.7 billion from the ADB, and $7 billion from the IBRD.

South Korea has yet to pay back the loans from the ADB and IBRD.