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History, Economic Crisis

South Korean currency, political alliance, cabinet reshuffle, economic restructuring, foreign debt

In 1997 the South Korean government was rocked by further scandals, this time involving fraudulent loans, which resulted in a cabinet reshuffle. An economic crisis developed in December when investors lost confidence in the debt-laden Korean economy and the South Korean currency rapidly depreciated. The plummeting currency quickly depleted South Koreaís foreign currency reserves, threatening the capacity of the government, banks, and industries to repay foreign debt. Furthermore, the unemployment rate soared as unstable businesses declared bankruptcy. The government accepted one of the largest aid packages ever arranged with the International Monetary Fund (IMF). The agreement required South Korea to implement tough austerity measures, such as reductions in public spending, and tax and interest rate hikes. The economic crisis occurred in the midst of presidential elections in December. Voters turned out the political alliance that had ruled the nation for decades and elected Kim Dae Jung, a longtime opposition leader and pro-democracy advocate. Kimís government vigorously pursued economic restructuring, and Kim emerged as a champion of deregulation, privatization, and foreign investment in South Korea. He led the country through short-term hardships associated with the reforms, including rising inflation and unemployment. In 1999 South Koreaís economy showed strong signs of recovery, and it sustained growth into the early 2000s.

Article key phrases:

South Korean currency, political alliance, cabinet reshuffle, economic restructuring, foreign debt, South Korean government, privatization, International Monetary Fund, IMF, rate hikes, economic crisis, unemployment rate, bankruptcy, public spending, reforms, foreign investment, Voters, banks, scandals, tax, confidence, reductions, capacity, agreement, growth, decades, investors, industries, country


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