S. Korea to offer US$16 bln for smooth trade financing

SEOUL, Nov. 13 (Yonhap) -- South Korea said Thursday that it will inject an additional US$16 billion into its financial system to help companies finance business activities amid frozen credit conditions.

The Finance Ministry said that it will pump in dollars starting next Monday in
cooperation with the nation's central bank. The move aims to help ease a dollar
shortage confronting local companies in importing raw materials and exporting
goods.
Of the total, the Bank of Korea (BOK) will supply $10 billion with the rest
coming from the government.
Money given by the BOK will have a maturity of six months, with funds being made
available to banks that have provided loan support to small- and medium-sized
enterprises.
The government's $6 billion assistance package is to be handled out as import
usance, which is used to facilitate the import of raw materials and key
components needed by local industries. Those loans will also be due in six months
and are to be released by the state-operated Export-Import Bank of Korea.
The ministry also said it will step up concerted efforts with the Financial
Services Commission, the Financial Supervisory Service and the central bank to
carefully monitor the effects of the support package and make certain that funds
are used to help frontline companies.
"Authorities will conduct regular check-ups to make certain that funds are used
properly and not diverted to other purposes by commercial lenders," a official
said.
Companies have complained in the past that government aid packages have been
ineffective because banks did not extend loans or provide payment guarantees.
The move will bring the total amount of dollars that the government and the
central bank have supplied to the financial system to $55 billion, the ministry
said.