Currency Crisis and IMF Bailout

With foreign reserves exhausted, South Korea took an IMF bailout; the Kim Dae-jung government restructured the economy and repaid the loans in full in 2001.

In 1997 major conglomerates such as Hanbo and Kia collapsed one after another, and as the Southeast Asian currency crisis spread, foreign capital fled. With reserves nearly exhausted, the government asked the International Monetary Fund for a bailout in November and signed a memorandum of understanding on 3 December.

In the December presidential election Kim Dae-jung won, the first transfer of power to the opposition by election. His government set up a tripartite commission of labour, management and government and restructured finance, business, labour and the public sector, during which many firms closed and unemployment rose. The IMF loans were repaid in full in August 2001.