S. Korea unveils $39 bln special bailout to support small firms and self-employed

By Lim Chang-won Posted : March 19, 2020, 14:47 Updated : March 19, 2020, 15:15

[Courtesy of the presidential Blue House]

SEOUL -- South Korean President Moon Jae-in unveiled a special rescue package worth 50 trillion won ($39 billion) for small businesses and manufacturing firms hit hard by a coronavirus epidemic that weakened private consumption and sent consumers staying at their homes.

The special package is aimed at preventing small and medium-sized firms, small business owners and self-employed businessmen from going down and easing their credit crunch, Moon said in an emergency policy meeting, suggesting more is to come. "Today's action is part of the necessary measures, and more measures are needed to weather the economic crisis."

"This is a package program for the financial stability of people's livelihoods, an unprecedented comprehensive measure in size and content," Moon said, describing the special package as the first step to prevent the bankruptcy of small and medium-sized enterprises, small business owners and self-employed businesses.

The package includes 12 trillion won, which would enable small business owners to borrow money at the preferential interest rate of about 1.5 percent from every financial institution, along with a loan guarantee program and the rollover of debts.

"As it is not a normal situation, we should move away from the conventional way," Moon said, calling for cooperation from local governments and all financial institutions in South Korea to provide swift financial assistance. Moon said the government's top priority is to prevent people's lives from falling apart.

Separately, the government promised to create a bond market stabilization fund and expand the purchase of corporate bonds as the pandemic rattled financial markets. The government has already secured 11.7 trillion won in extra budget to ride out the crisis, but many analysts agree that's not enough to ease widespread jitters in the business community.

"In difficult market situations, someone needs to play a role in buying bonds and circulating money," Finance Minister Hong Nam-ki said. The central Bank of Korea said that it would purchase state bonds worth 1.5 trillion won.

 
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