Why did South Korea receive an International Monetary Fund bailout in 1997?

South Korea sought a $57 billion bailout from the International Monetary Fund in 1997 due to severe economic instability caused by a combination of domestic and systemic factors.12

Key contributors to the crisis included:

• Excessive Debt and Expansion: South Korean conglomerates, known as chaebol, had accumulated staggering amounts of foreign debt to fuel aggressive industrial expansion.3
• Financial Contagion: The country was caught in the broader Asian financial crisis, which began in Thailand and triggered massive capital flight and sharp devaluations of regional currencies, including the South Korean won.2
• Structural Weaknesses: Critics pointed to the close, often opaque, relationships between the government and major businesses, which led to concerns regarding crony capitalism and a lack of regulatory oversight.42

The IMF bailout was provided with strict conditions aimed at restructuring the nation's foreign debt, reforming the chaebol, and liberalizing the economy to create a more stable, neoliberal financial structure.312