'316 Trillion+α' Record-Breaking Trade Finance... Government Calls It "The Best Card to Prevent Surplus Bankruptcy"

Not Just Increasing Budget Size but Presenting New Content
Trade Finance Screening Fast-Track Applied for 1 Year... Period Reduced from 1 Week to 2 Days
Only Core Proofs Needed Like Business Duration, Debt Ratio, Export Performance
Government: "We Will Help Export Companies Focus on Exporting Without Financial Worries"

[Image source=Yonhap News]

[Asia Economy Reporter Moon Chaeseok] The government has put forward a trade finance support card exceeding a record-breaking 316.3 trillion won to prevent surplus bankruptcies among our export companies. It has drawn attention by adding unprecedented measures, such as deciding not to reduce the amount when extending the maturity of export insurance and guarantees for export companies for the first time in history.

According to the government on the 12th, it announced on the 8th at the 4th Emergency Economic Meeting that it would additionally supply trade finance of "36 trillion won + α" to our export companies. Adding the 20 trillion won financial support recently announced by the Export-Import Bank, the total support will reach a record high of 316.3 trillion won. This year, the trade finance budget was set at a record high of 257.2 trillion won, and after an additional 3.1 trillion won was supported at the 'Expanded Trade Strategy Adjustment Meeting' at the end of February, the government concentrated its efforts with "36 trillion + α."

The government judged that due to the COVID-19 pandemic, demand from the United States, China, and the European Union (EU) has sharply declined, raising concerns that our export companies might face surplus bankruptcies if they fail to secure funding in time. It expressed a strong determination to prevent early mishaps such as global financial institutions recalling loans during the recession. For the first time ever, the government decided not to reduce the amount when extending the maturity of export insurance and guarantees for export companies, supporting 30 trillion won. Thanks to this, our export companies will be able to extend the insurance and guarantee limits for one year without reduction with the US, China, EU, and others.

A government official explained, "Due to the COVID-19 situation, the credit ratings of more than 10,000 buyer institutions in the US, China, and the EU are likely to be downgraded en masse," adding, "If financial institutions in those regions reduce loan limits during the recession, export companies that have the capacity to repay might face liquidity shortages and receive less funding than planned, so the government steps in to provide guarantees." He said, "This is to allow companies to focus on exports without financial worries for at least one year," and added, "We believe this will be more effective than direct cash support."

It is also different from before in that it is not simply an increase in budget. The policy goal is to help companies use funds 'at the right place and time' so that they can 'focus solely on exports without financial worries.' To this end, a fast-track trade finance review process will be applied for the first time for one year. The average review period, which used to take one week, will be shortened to within two days. Only key checklists such as business history, debt ratio, and export performance will be reviewed, and the approval period for each item will be drastically reduced, cutting the average review time from one week to within two days.

Regarding this, Sung Yun-mo, Minister of Trade, Industry and Energy, said, "Experts compare the relationship between the real economy and finance to the human body and blood vessels," and emphasized, "Through this measure, we plan to thoroughly prevent so-called 'money clots' (temporary liquidity crises) to ensure that excellent export companies do not face surplus bankruptcies."

Minister Sung added, "I hope that trade finance will serve as a stepping stone toward a 'new leap forward after the crisis,'" and urged, "Please trust the government and devote yourselves to normal export activities."

The government explained that it devised this support policy inspired by the fact that countries around the world are focusing not merely on supporting export insurance through overseas export credit agencies like Korea Trade Insurance Corporation (K-Sure), but on expanding emergency liquidity supply such as export production fund loan guarantees and working capital.

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