Seoul Turns the Right Way

South Korea took a fiscally responsible move today in deciding to seek help from the International Monetary Fund. Seoul’s reluctance to tap the institution that the world looks to for the rescue of economically ailing nations had been further eroding confidence in the battered economy. Eventually the government set aside politics and fear of humiliation to do the right thing.

South Korea reportedly has decided to seek a bailout package of about $60 billion, the biggest of its kind ever. Its troubled economy is the 11th-largest in the world.

Seoul initially sought help directly from the United States, but Washington properly advised the Seoul government to go to the IMF as Thailand and Indonesia had done. Despite its 1995 bailout of Mexico, the United States has been urging international remedies for Asian nations in the recent series of crises instead of one country taking the lead on bailouts. Korea also looked to Tokyo for help, but Japan has big problems of its own.

On Thursday, South Korea’s new finance minister, Lim Chang Ryul, and others met with top officials of the IMF and the U.S. Treasury. The IMF will require Seoul to agree to some reforms, which the government has been avoiding. Such changes will benefit the country in the long run.

The worsening economic crisis has been occurring against the political backdrop of next month’s presidential election. There had been reluctance to make any decision that the voters might perceive as a sign of weakness.

On Wednesday the government unveiled some economic reforms, but they were seen as inadequate. Repayment of about $67 billion of South Korea’s foreign debt is due within the next 12 months.

Seoul’s decision to seek help from the IMF came after deputy finance ministers of the Asian Pacific Economic Cooperation group decided earlier in the week to maintain the IMF’s “central role” in any rescue packages. Seoul can take pride in its new direction.