WASHINGTON, Dec 25: The IMF, the United States and 12 other nations pledged to speed $10 billion in bail-out money to South Korea to support its embattled economy.

But for Seoul to recover, they said it was critical that international commercial banks agree to a "significant" debt rescheduling to aid ailing Korean financial institutions.

The IMF said in a statement that it would make $2 billion available to South Korea on December 30 from the $21 billion it had already set aside for the financially troubled country. The IMF plans to dole out another $2 billion to Seoul on January 8.

The United States, Japan, France, Germany, Britain, Canada,Italy, Australia, Belgium, the Netherlands, New Zealand, Sweden and Switzerland said they would hand over $8 billion to South Korea by early January.

The $8 billion is part of $24 billion those countries had already pledged, but was previously expected to be used only as a last resort. The United States said it would chip in $1.7 billion. Tokyo's contribution will be $3.33 billion. Britain said it would provide more than $400 million.

"This is a major world event and they have made extraordinary efforts," US treasury secretary Robert Rubin said of Seoul's newly-elected government. "It seemed appropriate for the (Group of Seven) industrial countries and other nations involved in the second line of defence" to move their aid effort forward, he added.

South Korea turned reluctantly to the international community for help last month as its financial system crumbled under the strain of bad loans and a weakening currency.

The nearly $60 billion rescue package that the IMF put together, even bigger than a US-led international bailout for Mexico in 1995, was the third multibillion-dollar loan masterminded by the fund this year. The IMF has also led costly bail-out programmes for Thailand and Indonesia.

At a briefing for reporters, Rubin defended his decision to let Seoul draw on what was expected to be a second line of defence. He said the disbursements were needed because South Korean stability was "critically important" to US economic and national security interests.

South Korea already has taken significant steps to open up its economy and to reform its management, and it was fitting for its trading partners to take an extra step to speed the effort, Rubin said.

Finance minister Lim Chang-yuel said earlier in Seoul that South Korea had agreed to several fresh reforms in exchange for the swift aid -- opening capital markets much quicker, and allowing foreign banks and security firms to open wholly-owned subsidiaries.

South Korea's inability to get lenders to roll over short-term debt has been at the heart of the crisis. About $15 billion of an estimated $100 billion in short-term debt was coming due this month and another $15 billion next month.

Lim said Seoul was in talks with commercial banks about possible debt rollovers. He said he was also discussing "the possibility of access to market borrowing in early 1998."

At a briefing in Washington, senior IMF officials said they expected major commercial banks to agree to a "significant" increase in debt rollovers or maturity extensions.

"The commercial banks have to do their part," said one IMF official, who asked not to be identified. "This is to be done on a voluntary basis. We expect that will be done." Japanese officials said the rolling over of existing loans by private banks to South Korea would be a precondition for support by donor countries.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.