ID :
25840
Tue, 10/21/2008 - 19:08
Auther :
Shortlink :
https://www.oananews.org//node/25840
The shortlink copeid
Korea likely to implement bank debt payment guarantee
By Shin Hae-in
SEOUL, Oct. 21 (Yonhap) -- South Korea is likely to put into effect a US$130 billion rescue package aimed at shoring up the local stock market and a troubling currency shortage after the measures were approved by the Cabinet and were given verbal consent from rival political parties Tuesday.
The package, which comes amid the escalating global credit crisis, provides
three-year state guarantees for local banks' foreign debts worth up to $100
billion, with another $30 billion going directly to banks and companies.
The latest market stabilization efforts come as analysts question South Korean
banks' ability to acquire enough dollars to pay off maturing foreign loans as
credit conditions tighten worldwide.
An already squeezed credit market took yet another bad turn following the
collapse of five of the largest financial institutions on Wall Street last month.
South Korea's won has been one of the worst-performing of Asian countries, losing
about 25 percent since the start of this year. The nation's benchmark stock index
has fallen more than 35 percent, though it climbed slightly on the back of
proposed government measures, closing up about 2.3 percent on Monday.
Related to the government's plan to help banks, Moody's Investors Service said
the decision will be helpful in addressing uncertainties in the international
financial system.
The report then said that country's credit fundamentals will not be swamped, as
was the case in the 1997-98 Asian financial crisis, stressing that the solvency
of the Korean financial system is not in jeopardy.
It said that its A2 rating for the country is appropriate since it makes full
allowances and reflects various conditions
Local lawmakers, recognizing the importance of the issue, agreed to put aside
their political differences and promptly settle to pass the financial support
measures.
Populist legislators from the main opposition Democratic Party and the
left-leaning Democratic Labor Party have been skeptical about using taxpayers'
money to fix what they claim are blunders made by the government and state-run
banks.
"We have decided to cooperate on prompt settlement of the bills. We will request
the government to map out measures to prevent further lapses by banks," the
ruling party's chief policymaker Lim Tae-hee told reporters after a meeting with
his two counterparts.
The parliament has been widely split over the conservative Lee Myung-bak
administration's recent economic measures, with opposition parties questioning
the ability of economic policymakers, led by Finance Minister Kang Man-soo, to
tackle the current crisis and demanding their replacement.
President Lee, a former CEO who won the December election on the back of his
flagship pledge to reinvigorate the faltering economy, has been suffering from
low approval ratings in the low 20-percent range since April, when he made the
unpopular decision to resume imports of U.S. beef.
SEOUL, Oct. 21 (Yonhap) -- South Korea is likely to put into effect a US$130 billion rescue package aimed at shoring up the local stock market and a troubling currency shortage after the measures were approved by the Cabinet and were given verbal consent from rival political parties Tuesday.
The package, which comes amid the escalating global credit crisis, provides
three-year state guarantees for local banks' foreign debts worth up to $100
billion, with another $30 billion going directly to banks and companies.
The latest market stabilization efforts come as analysts question South Korean
banks' ability to acquire enough dollars to pay off maturing foreign loans as
credit conditions tighten worldwide.
An already squeezed credit market took yet another bad turn following the
collapse of five of the largest financial institutions on Wall Street last month.
South Korea's won has been one of the worst-performing of Asian countries, losing
about 25 percent since the start of this year. The nation's benchmark stock index
has fallen more than 35 percent, though it climbed slightly on the back of
proposed government measures, closing up about 2.3 percent on Monday.
Related to the government's plan to help banks, Moody's Investors Service said
the decision will be helpful in addressing uncertainties in the international
financial system.
The report then said that country's credit fundamentals will not be swamped, as
was the case in the 1997-98 Asian financial crisis, stressing that the solvency
of the Korean financial system is not in jeopardy.
It said that its A2 rating for the country is appropriate since it makes full
allowances and reflects various conditions
Local lawmakers, recognizing the importance of the issue, agreed to put aside
their political differences and promptly settle to pass the financial support
measures.
Populist legislators from the main opposition Democratic Party and the
left-leaning Democratic Labor Party have been skeptical about using taxpayers'
money to fix what they claim are blunders made by the government and state-run
banks.
"We have decided to cooperate on prompt settlement of the bills. We will request
the government to map out measures to prevent further lapses by banks," the
ruling party's chief policymaker Lim Tae-hee told reporters after a meeting with
his two counterparts.
The parliament has been widely split over the conservative Lee Myung-bak
administration's recent economic measures, with opposition parties questioning
the ability of economic policymakers, led by Finance Minister Kang Man-soo, to
tackle the current crisis and demanding their replacement.
President Lee, a former CEO who won the December election on the back of his
flagship pledge to reinvigorate the faltering economy, has been suffering from
low approval ratings in the low 20-percent range since April, when he made the
unpopular decision to resume imports of U.S. beef.
