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S Korea guarantees foreign loans | S Korea guarantees foreign loans |
(about 1 hour later) | |
South Korea's government has agreed to guarantee foreign-currency borrowing by the country's banks to help stabilise financial markets. | |
The finance ministry, the central bank and the financial services commission said about $100bn of borrowing would be covered by the package. | |
The government will also provide $30bn of liquidity to banks, and there will be more aid to small businesses. | |
South Korea's economy is the third largest in Asia and 13th in the world. | |
It enjoys major export success in a number of manufacturing industries, but especially shipbuilding, car-making, and electronics. | It enjoys major export success in a number of manufacturing industries, but especially shipbuilding, car-making, and electronics. |
However, analysts say the country has appeared particularly vulnerable to the global credit crisis because its banks lacked sufficient dollars to service maturing foreign debt. | However, analysts say the country has appeared particularly vulnerable to the global credit crisis because its banks lacked sufficient dollars to service maturing foreign debt. |
In a statement, the government said it would guarantee for three years all external debt taken on by South Korean banks before 30 June 2009 in order "to avoid placing domestic banks at a comparative disadvantage in terms of overseas funding and to allay fears in the financial market". | In a statement, the government said it would guarantee for three years all external debt taken on by South Korean banks before 30 June 2009 in order "to avoid placing domestic banks at a comparative disadvantage in terms of overseas funding and to allay fears in the financial market". |
A further $750m will be injected into the Industrial Bank of Korea, so it can expand lending to small businesses. | |
The government said that despite the crisis, the economy and the financial sector were "sound", and that its foreign exchange reserves were "sufficient". | The government said that despite the crisis, the economy and the financial sector were "sound", and that its foreign exchange reserves were "sufficient". |
The US, the EU and other governments have also announced multi-billion dollar packages aimed at stabilising markets. |