Gov't extends overseas borrowing guarantee by 6 months

SEOUL, April 7 (Yonhap) -- The government said Tuesday it will extend by sixth months its guarantee on overseas borrowing for local banks to help them secure more liquidity in the face of tight credit conditions.

According to the Ministry of Strategy and Finance, the government approved a bill
during a Cabinet meeting earlier in the day to extend the guarantee until the end
of this year.
In October, the ministry announced that it would provide as much as US$100
billion worth of state guarantees on banks' foreign debts until June 30 this
year. The move was intended to ease a dollar shortage and shore up market
confidence, which had been pummeled by the global financial turmoil.
The extension, subject to parliamentary approval, comes as local banks are
struggling to borrow dollars from foreign lenders. Banks have become wary of
giving loans amid the financial crisis, which was tipped off in mid-September.
Concerns over a dollar shortage have prompted the local currency to tumble in
recent months, causing some market observers to worry that the nation could face
a repeat of the liquidity crisis it suffered a decade ago.