Abstract
Korean financial markets were shallow for a long time, which restrained the financing of fiscal deficits through domestic bonds. The alternatives left were either to rely on external economic assistance, or to borrow from the international capital markets or obtain domestic credit from the central bank. Korea at first relied heavily on external assistance, and then financed its budget deficits primarily through external borrowing, which also helped support its conservative monetary and fiscal policies. The other benefits of such a strategy were keeping prices under reasonable control and containing the degree of instability in the real exchange rate. It also helped in maintaining a reasonable level of foreign exchange reserves.
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Notes and References
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© 1992 Dilip K. Das
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Das, D.K. (1992). External Finances and Debt Management. In: Korean Economic Dynamism. Palgrave Macmillan, London. https://doi.org/10.1057/9780230373853_6
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DOI: https://doi.org/10.1057/9780230373853_6
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