Gov't to supply US$38 bln in funds to smaller firms this year

SEOUL, Jan. 8 (Yonhap) -- South Korea will seek to provide about 50 trillion won
(US$38 billion) in new funds to smaller companies this year to help them cope
with cash shortages amid a slumping economy, the nation's financial watchdog said
Thursday.
Smaller local companies are suffering from a liquidity squeeze as banks have
become wary of lending to them due to mounting bad loans.
"The government will push to supply more than 60 percent out of the planned funds
to smaller companies in the first half when a severe downturn is expected," the
Financial Services Commission (FSC) said in a statement.
The watchdog said it will expand its debt guarantee capacity for state-owned
credit guarantee agencies to 25.2 trillion won this year from 13.5 trillion won
in 2008 in a bid to help reduce risk burdens in lending to smaller firms.
Two state-owned banks -- the Korea Development Bank and Industrial Bank of Korea
-- also plan to increase loans to small and medium enterprises by a combined 44
trillion won this year, it added.
sooyeon@yna.co.kr
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