The large size of the current account surplus was necessary for redeeming the
country from a state of insolvency in terms of foreign exchange. This is clear when account
is taken of net capital outflow, which continued to be high through out 1998. For the whole
of 1998, net capital outflow was about US$ 9.6 billion. This was the case in spite of about
US$ 6.9 billion in direct investment inflow into the country and about US$ 3.1 billion net
borrowing by the authorities. Thus, repayment of past debt was very sizeable, amounting to
about US$ 20 billion. This is not surprising given the large amount of external debt,
particularly the amount of short-term debt, which was about US$ 35 billion at the beginning
of 1998. Without the large current account surplus, the country's state of insolvency would
have continued in spite of the IMF financing package.