Expansion of Employment Retention Subsidy to 500 Billion Won... 20 Trillion Emergency Financial Support for Export-Import Companies (Comprehensive)

Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance (center), Eun Sung-soo, Chairman of the Financial Services Commission (right), and Park Young-sun, Minister of SMEs and Startups, are briefing on the results of the 1st Emergency Economic Meeting at the Government Seoul Office in Jongno-gu, Seoul on the 19th. Photo by Kim Hyun-min kimhyun81@

[Asia Economy Reporters Kwangho Lee and Sehee Jang] The government will significantly increase the Employment Retention Subsidy by 500 billion KRW to respond to the novel coronavirus infection (COVID-19). Additionally, it will provide 20 trillion KRW in emergency financing to export-import and overseas expansion companies, including large corporations. Furthermore, to temporarily exempt foreign exchange soundness burden charges for financial companies and to encourage banks to smoothly supply trade finance, specific measures to ease the current 80% foreign currency LCR regulatory burden will be announced within this week.

On the 25th, Deputy Prime Minister and Minister of Economy and Finance Hong Nam-ki held the Economic Ministers' Meeting on COVID-19 Response and the 2nd Crisis Management Countermeasures Meeting to discuss these support measures.

In his opening remarks, Deputy Prime Minister Hong said, "As the impact of COVID-19 spreads throughout the economy, applications for the Employment Retention Subsidy are rapidly increasing across almost all industries, including education, retail, and manufacturing," adding, "The government plans to increase the Employment Retention Subsidy from the current level of about 100 billion KRW by an additional 400 billion KRW, totaling 500 billion KRW."

Deputy Prime Minister Hong also stated, "The support level will be significantly raised temporarily for all industries from April through the end of June," and expressed hope that "this will greatly reduce the employers' self-pay ratio for employment retention and substantially alleviate workers' employment insecurity."

He further emphasized, "We will provide 20 trillion KRW in emergency financing through the Export-Import Bank to export-import and overseas expansion companies facing severe difficulties due to the global value chain (GVC) shock and restrictions on global human and material movement."

Deputy Prime Minister Hong explained, "First, we plan to supply 8.7 trillion KRW in new liquidity. Specifically, by utilizing existing loan and guarantee programs, we will additionally supply 4.7 trillion KRW, including 2.2 trillion KRW in new loans and 2.5 trillion KRW in guarantee support," adding, "We will provide 2 trillion KRW in emergency management funds for companies without export-import contract performance or those that have exhausted their loan limits, and introduce export performance-based funds expanded to include large corporations, supplying 4 trillion KRW to target companies including large corporations."

He added, "For existing loans amounting to 11.3 trillion KRW maturing within six months, we will also extend the maturity by up to one year."

The meeting also discussed follow-up measures related to foreign currency liquidity.

Deputy Prime Minister Hong said, "Last week, we already increased the forward exchange position limit by 25% to expand foreign currency funding capacity in the foreign exchange swap market," and mentioned, "This time, to ease the foreign currency borrowing costs of financial companies, we will temporarily exempt foreign exchange soundness burden charges and announce specific measures within this week to temporarily ease the current 80% foreign currency LCR regulatory burden to encourage banks to smoothly supply trade finance."

He added, "We will ensure that the Korea-US currency swap funds announced last week are promptly and fully supplied to the market, and continue to expand liquidity supply to the market to alleviate foreign exchange supply-demand imbalances in the foreign exchange swap market."

This content was produced with the assistance of AI translation services.