S. Korea doubles emergency corporate bailout to $80 bln

25, Mar. 2020

woman-walking-on-pathway-between-stores-2128039.jpg

SEOUL, AJU - President Moon Jae-in doubled the size of a special rescue package to 100 trillion won ($80 billion) to ease a corporate liquidity crunch and prevent companies from going belly-up due to a coronavirus pandemic that has disrupted global trade and dealt a serious blow to South Korea's export-oriented economy.

A special rescue package worth 50 trillion won ($39 billion) was approved on March 19 for small and medium-sized firms, small business owners and self-employed businessmen hit hard by the epidemic that sent consumers staying at their homes, but that's not enough to stabilize the South Korean economy as many companies are heavily dependent on foreign trade.

"The global economy is in crisis. It's hard to tell when the end will be," Moon said at an emergency economic meeting on Tuesday after doubling the rescue package to 100 trillion won. "Normal and competitive companies will never shut down due to temporary liquidity shortages," he said, calling for active support to help viable companies raise operational funds.

"We are in a situation where production and export disruptions caused by the collapse of the global supply chain will lead to worsening performance and falling corporate credit, which could put companies in a liquidity crisis and we need to take measures against it," Moon said.

The government has already unveiled a set of measures to ride out the crisis, but many analysts agree that's not enough to ease widespread jitters in the business community. The Financial Supervisory Commission (FSC), a state financial watchdog, said on Tuesday that a total of 42 trillion won would be funneled into the financial markets rattled by the pandemic, including a bond market stabilization fund worth 20 trillion won.