[2020 National Audit] Dong-geol Lee "Kian Fund at Market Interest Rate Level Matching Credit Rating"

Lee Dong-geol, Chairman of Korea Development Bank, attended the National Assembly's Public Administration and Security Committee hearing on the 16th for the audit of Korea Development Bank and related institutions, reviewing documents. Photo by Yoon Dong-joo doso7@

[Asia Economy Reporter Kangwook Jo] Lee Dong-geol, Chairman of the Korea Development Bank, said on the 16th regarding the controversy over the high interest rates of the 40 trillion won-scale Period Industry Stabilization Fund (GISF), "Support should be provided in line with the average market interest rate to prevent unnecessary loans."

At the National Assembly's National Policy Audit by the Political Affairs Committee on the same day, Lee responded to the criticism from Seong Il-jong, a member of the People Power Party, who asked, "Who would use the GISF with interest rates higher than commercial banks?"

The GISF has decided to provide a total of 2.4 trillion won in funds to Asiana Airlines at an interest rate in the 7% range per annum. Since the current funding cost for the GISF is around 1-1.5% per annum, there is controversy that the loan interest rate is too high.

Lee said, "There is a need to support at a special interest rate," but added, "From the bank's perspective, support should be provided in line with the average market interest rate to prevent unnecessary loans."

He further explained, "I understand that the GISF interest rate is determined at a market interest rate level corresponding to the credit rating of the supported company," and added, "If support is provided at an interest rate lower than the credit rating, subsidy controversies could arise at the World Trade Organization (WTO)."

Kim Byung-wook, a member of the Democratic Party of Korea, pointed out the low execution performance, noting that Asiana Airlines is the only company applying for the GISF.

In response, Lee said, "Some companies tend to resolve issues in the market because the conditions are burdensome, and some do not apply because they do not meet the internal conditions," adding, "Although the current execution of the fund is low, we need to observe the trend."

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