South Korea says it's close to reaching an agreement with the International Monetary Fund on the terms of a multi-billion dollar bail-out package for the stricken economy. The finance minister, Lim Chang-yuel, said he hoped to be able to announce a deal to the national assembly on Monday. South Korean media reports that the IMF is setting tough conditions, including the closure of banks and a major hike in interest rates. Charles Scanlon reports from Seoul:
The speed of the negotiations between South Korea and the IMF has come as a surprise as the talks had been expected to drag on for several weeks. But the finance minister, Lim Chang-yuel, says a deal is imminent after just four days.
South Korean state television reports that the IMF is setting tough conditions in return for a bail-out package. It wants the liquidation of at least three banks and 12 merchant banks.
It is also demanding the opening of South Korea's financial markets to foreign competition and projections for much lower economic growth next year. Analysts say the conditions would lead to real economic pain, including many corporate bankruptcies and a rapid rise in unemployment.
The South Korean government is reported to be trying to soften the package and to delay the closure of the banks, but it is fast running out of options.
Japan and the United States have demanded compliance with the IMF as a condition for contributing to the rescue fund.
South Korea's stock market is locked into a downward spiral and the currency, the won, has resumed its fall against the US dollar. A rapid infusion of capital from the IMF is considered essential if confidence in the markets is to be restored.
The South Korean government has been doing its best to play down the economic difficulties in recent weeks. It must now prepare public opinion for a period of wrenching change which could provoke a social backlash.