154/97
3 December 1997
UK backs Korea IMF Programme
The UK Government fully supports the programme of economic and financial reform announced today by Korea in agreement with the International Monetary Fund (IMF), Chancellor Gordon Brown said today.
The Chancellor said :
"The UK Government fully supports the IMF programme which has been agreed by Korea. This programme will involve approximately $21 billion of IMF finance, along with financing from the World Bank and the Asian Development Bank.
"In addition, the UK, together with a number of other countries, has agreed to consider the provision of further financial support for Korea. This will be made available only if unanticipated circumstances create the need to supplement resources provided by the International Financial Institutions, while Korea remains in compliance with the IMF arrangements. The UK is willing to consider a contribution of up to $1.25 billion.
"Agreement with the IMF on Korea's programme of reform marks an important step in restoring confidence in Asia, and in helping safeguard the stability of the world financial system.
"As a major IMF shareholder, the UK believes that acting with the support of the IMF is the right way for the Korean authorities to have handled their financial situation. And as a major World Bank shareholder we support its crucial role in restructuring the
financial sector of the Korean economy.
"As an open economy, the UK benefits from substantial trade and investment flows with Asia and the rest of the world. Global financial stability is crucial if we are to deliver sustained economic prosperity and job creation at home.
"We have a strong national interest in working with our international partners and the IMF to help Korea reform its economy and overcome its present financial difficulties. I
welcome today's announcement."
Notes for editors
1. The UK response to the outcome of negotiations was announced to Parliament in reply to a question from Stephen Timms (East Ham) The text of the Chancellor's reply
is attached.
2. Media enquiries should be addressed to Charles Keseru on 0171 270 5188.
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Stephen Timms (East Ham) :
To ask Mr Chancellor of the Exchequer if he will make a statement on negotiations between the IMF and Korea
Chancellor of the Exchequer:
I am pleased the Managing Director of the IMF has reported today agreement with the Korean authorities to a strong programme, which he will recommend to the Board of the IMF.
If the programme is agreed, the UK is prepared with some of our European and other G7 partners to consider, if needed, supplementary finance in support of the programme. The UK would consider an amount up to the equivalent of $1.25 billion.
Any loan would depend on a financing need and would only to be made with agreement by the IMF. Were such a loan to be made it would be advanced by the Bank of England to the Central Bank of Korea. The Treasury would provide to the Bank of England an indemnity under the 1983 International Monetary Arrangements Act.