Go to contents

[Opinion] A Depressing `IMF` Graduation

Posted August. 25, 2001 09:19,   


Maybe they were too embarrassed to do it in the open, because two days ago Cheong Wa Dae hosted a party just for them. The party, in celebration of repaying all the IMF loans, was almost pitiful. Remembering the pain of having to suffer IMF control after the national economy collapsed, the `graduation` party after three years and eight months could have been a major national event.

Then again, the administration may not have felt too festive when we are facing the worst economic growth since the greatest export reduction and foreign exchange crisis in history. It is a bit of a stretch to expect people to clap and cheer when the nation is so fiercely divided and no one can speak to one another with frank openness. For many reasons, the graduation party where lessons of the past and hopes for the future should be iterated was pitifully held in some obscure corner of Cheong Wa Dae.

It is unnecessary, however, to pity the government because it actually did host a large IMF graduation party on December 12, 1999. On that day, IMF announced `the termination of its management of the Korean program` and our government took full control of the nation`s economic policy. At Cheong Wa Dae, around 120 people attended the celebrations, including President Kim Dae Jung and personages from the economy and financial sectors, all of them shining bright and happy smiles. These are some of the recorded statements from those present that night.

``As a result of our hard work in overcoming IMF`s structural adjustments, our country has successfully made corporation and financial structural reforms. We thank all those who are present today.`` (Kang Bong Kyun, former Head of the Ministry of Economy and Finance)

``We want to offer a toast of thanks to the President for giving governmental support for structural reforms.`` (President of Dae Han Consulting)

``This is truly a meaningful and joyous occasion. I would like to congratulate and thank everyone for working through the excruciating structural reforms and successfully graduating from the IMF program.`` (President Kim Dae-Jung)

Did we really graduate from the IMF that day? Announcing early on that we had successfully achieved the corporation and financial structural reforms, which are still going on, paints a ridiculous picture of that person whose name means the end of our economic policy.

No wonder, then, that exactly one year after that celebration, stock prices plummeted and bankrupt businesses once again filled the streets with the unemployed. At the time, one foreign economist explained the reason for another economic decline in theses words, ``The Korean economic crisis began again when the administration announced the end of the IMF program one year ago.`` There are many possible evidence for this view, which makes it all the more persuasive.

Frankly, the reason why no one suffered in 1999 does not have much to do with the government. We merely benefited from the general up swing in 1998 in the global economy. It was not the accomplishment of the sacrifices made in corporate and finance structural reforms. The poor quality of profit mechanisms of corporations and financial organizations testify to this. However, we were intoxicated by the appearance of growth rather than qualitative improvements, and followed the government in loudly touting the end of IMF programs.

The announcement of the end of the crisis came four months before the general elections and social anxieties quickly dissolved as banks and corporations, drunk on public investments, began enjoying the `moral hazard`.

A political logic motivated by getting votes created the policies which ignored structural reforms and the pain that accompanies, and the repeating conflict between labor and management has left the streets littered with Molotov cocktails. And what are we left with after all that?

We wanted change but what did we actually achieve? When we first entered the IMF `tunnel`, we anxiously ran toward the unknown future without knowing when the tunnel will end, and we earnestly reflected on the faults of the past paradigm, promising ourselves that we will not repeat the same mistakes. Yet, we regrettably failed to reach the other end where a new structure and system awaited us, but turned around in the middle of the tunnel only to come out the same way as before. The former conditions still remain in the areas of politics, economy, and society, and this is partly due to the government bringing out the champagne much too early.

The second `IMF graduation` took place, but we are busy collecting gold and preparing for our children`s future, hoping that we won`t have to repeat our years with IMF. It was a depressing graduation.

Lee Kyu-Min (Editorial Staff Member)

Lee Kyu-Min kyumlee@donga.com