Seoul approves $130-bn package for financial sectorOctober 19th, 2008 - 5:55 pm ICT by IANS
Seoul, Oct 19 (DPA) The South Korean government agreed Sunday on a package of over $130 billion to stabilize the country’s financial sector.The package offers a combination of credit guarantees and the infusion of fresh capital to boost liquidity in the banking and export sector, in line with worldwide coordinated efforst to stabilize finance markets, the finance ministry said.
“The Korean government will take similar measures to avoid placing domestic banks at a comparative disadvantage in terms of overseas funding and to ally fears in the financial market,” Finance Minister Kang Man Soo said.
The government is to guarantee up to $100 billion worth of three-year foreign loans taken on by banks up till the end of June 2009.
The ministry insisted that despite the current credit crisis, South Korea’s real economy and its financial sector were in “solid” condition.
Besides the loan guarantees, the country’s central bank is to provide additional liquidity of some $30 billion to banks and exporters, the money coming from South Korea’s currency reserves which as of the end of September stood at $240 billion.
In addition, the government also announced it would expand the working capital of the Industrial Bank of Korea by a further 1 trillion won ($750 million) to shore up lending to small and medium-sized companies.
The stability programme is subject to approval by the South Korean parliament.