(SEJONG = Newsis) The Korean government seeks to prepare measures to promote private sector investment by using its Foreign Exchange Stabilization Fund.

Eun Seong-Su, Deputy Minister of International Economic Affairs at the Ministry of Strategy and Finance, outlined the government’s plan in his speech about uncertainties in the Korean economy and its countermeasures at a policy seminar held by the Korea Institute of Finance and Korea International Finance Association on January 14.

“We found out that the financing problem is the biggest obstacle for companies, so we decided to grant foreign currency loans. For this reason, the Korean government will take out USD 10 billion from the Foreign Exchange Stabilization Fund to support the companies,” said Eun.

The minister also said that “if the companies are able to lower their interest rate margin by borrowing from the banks at a lower interest rate, they will invest in capital equipment and the total investment will rise eventually,” adding that “the increase in investment can stimulate economic growth, create jobs and deliver a current account surplus.”

“Foreign exchange support has been a taboo issue for the Korean government. The government provided its foreign exchange deposits to the companies in 1997 for capital investment but failed to retrieve the deposits by its long-term investment plan. However, we plan to use the deposits for capital investment this year,” said Eun.

“Although the government cannot intervene in the market despite the current low yen phenomenon, the companies should consider the risk a new opportunity for them and focus on developing technologies and improving productivity. We will draw up measures to support many small and medium-sized enterprises that are expected to suffer the impact of the low yen phenomenon,” he said.

lst0121@newsis.com

Source Text

Source: Newsis (Jan. 14, 2014)

** This article was translated from the Korean.