[The Korean Times] Thanks i guess?

Who benefits from the Korea Lending Arrangement?

July 18th, 1998


While the recently passed IMF lending arrangement has been seen by some as a lifeline for South Korea’s economy, it has drawn strong criticism both at home and abroad. 


The 20 billion loan to South Korea at 0.5 percent was meant as a loan to stabilise the plummeting South Korean economy. This loan, structured in 3 phases, comes with a clause: 6 billion of the first 12 billion must be borrowed in the U.S. Treasury Bonds, and invested in US firms.


Critics of this arrangement have argued that this lending scheme amounts to a backdoor transfer of American debt onto the Korean public. It seems that half of the loans are invested in firms, safeguarding U.S. financial interests. Furthermore, funds allocated to the recovery of the Korean economy are monitored by a joint US-Korean committee, giving the US veto power over the usage of these funds.


This leads to the public questioning, Who really benefits from these funds? Foreign investors, overlending to chaebols in the first place, are now seeing their debts shifted onto the average Korean taxpayer. 


Lawmakers, civil society groups, and even your average Ajumma are calling the terms of this loan a "sovereignty surrender”. “This is not a financial rescue, this is a colonisation and surrender of our economy!” said one opposition leader.


While the economy has shown signs of improvement, the public is still unhappy about the situation, and economic recovery has not occurred as expected.


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