In accepting the money, South Korea agreed to stringent IMF conditions. The 1998 growth rate must be cut to 3 percent; inflation must be kept below 5 percent; and the current-account deficit must be slashed to within 1 percent of GDP. There's precious little sugar with this medicine — Seoul must maintain flexible monetary policies and allow temporary hikes in interest rates, says the IMF. A final bitter blow is that foreign investors will be allowed to increase their shareholdings in Korean companies to 50 percent this year — up from the 26 percent limit currently allowed by the government.
After three days of hemming, hawing and generally confusing the world, South Korean leaders have signed a letter of intent accepting a $57 billion bailout package from the International Monetary Fund. The measure, which would be the largest bailout the fund has ever provided, now goes to the IMF board for approval.