The dark days of 1997 and 1998, when we in South Korea witnessed our whole world crashing down before us, is often called the "IMF era" or even the "IMF crisis" by many Koreans (it is frequently — but less often — called the "economic 'cold snap'").
Critics of the Korean media (and Korean society, I suppose) deride this niggling nomenclature as a self-serving way of avoiding any Korean culpability for the events — in particular the shell game of intra-chaebol loans that caused Korea's conglomerates to be way overextended, plus an over-reliance on overseas loans that would have to be paid back in US dollars — that led to the crisis of confidence that hit Korea like an Asian contagion and caused the collapse.
On the other hand, the phrase "IMF era" or even "IMF crisis" was to many Koreans an apt way to describe the world of hurt that came down on the average citizen — in particular job losses as Korean companies were forced to strip away lifelong employment guarantees and the forced sale of adequately functioning state-owned assets — that were imposed by the International Monetary Fund in exchange for a bailout.
[I prefer to get around this by calling it the Chongchuk Hanpa ("the cold snap of 1997"), chŏngch'uk (정축/丁丑) being the Chinese zodiac sixty-year year cycle word for the period ending at Lunar New Year in 1998 (jeongchuk in the atrocious Retrograde Romanization).]
Frankly, I never really saw the case made that the relatively fiscally responsible ROK government was a factor in the economic collapse. I thought that IMF demands of greater transparency and an end to the house-of-cards loan guarantees were quite appropriate, but some of their other demands were irrelevant and even opportunistic. And I was one of the people who agreed thought they were good ideas.
In the end, South Korea got its bailout and the economy recovered, and Korea paid back its loans early. Some of the IMF demands provided a boost to the economy, while the others were mitigated by new social safety net spending (like a dramatic expansion of health insurance).
This ambiguous legacy of the IMF is one of the things covered in a Washington Post article highlighting the IMF's new role in the global economic crisis, but it is not the focus. The IMF had begun to appear irrelevant itself — and then the new economic crisis hit (let's call it the Muja Hanpa [무자/戊子]).
It appears the IMF is answering some of the criticisms related to the Korean case of 1997-98:
Last month, the IMF revamped its lending practices to make it easier for countries with strong economic policies to borrow more, faster and with fewer strings attached. The centerpiece is a new flexible line of credit designed to be used as a preventive measure.I'm not so sure South Korea or Singapore need to just yet. South Korea has changed a lot since 1997 — in part due to IMF demands — and that has helped it weather this current storm for now at least.
IMF officials said the fund was trying to respond to long-standing criticism that the organization imposes conditions on developing nations that are too harsh and even harmful to their economies. The flexible credit line replaces a credit line created last fall that had no takers because countries said it offered too little money and too rigid terms.
In a small sign of success, Mexico recently said it would use the new credit line. But South Korea and Singapore still refuse to do so.
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