Imf Conditionality

Shin se-gye(신세계)

IMF Conditionality – Did it really make us better?

INTRODUCTION

Since Thailand decided to adopt the floating exchange rate system because of pressure

from other countries in 1997, the value of Baht decreased dramatically, which is the main

cause of the Asian financial crisis. Most people who lent or invested money to Thailand

worried about not getting their money back, so started to collect the money from not only

Thailand but also other Asian countries. This has made the economies of Asian countries

even worse. Therefore, they eventually asked the IMF for help.

Korea also asked the IMF for help to save economy. However, it cost too much to get

the money from the IMF. Quite a number of companies and banks on bad condition were

eliminated and many people lost their job. Some people committed suicide at the worst. All

of Korean has gone through very tough time in 1997~1998. This is the impression that most

Koreans have about the IMF. Actually I know that the measures that the IMF took to help

Korea are expected to be effective and worked well in practice. But, wasn’t there really other

way to get out of the financial crisis in 1997?

The purpose of this paper is to analyze the conditions of IMF and the effect from those

conditions and to research the other countries that didn’t ask the IMF for help. This paper also

tries to figure out what else Korea could do to overcome the crisis.

HISTORY AND MAIN ACTIVITIES OF THE IMF

The IMF was founded more than 60 years ago toward the end of World War II. The

founders aimed to build a framework for economic cooperation that would avoid repeating

disastrous economic policies that had contributed to the Great Depression of the 1930s and

the global conflict that followed.

The IMF provides policy advice and financing to members in economic difficulties and

also works with developing countries to help them achieve macroeconomic...