SEOUL, April 29 South Korea unveiled on Tuesday
final details of a plan to lend up to $10 billion of its $350
billion-plus foreign currency reserves to eligible local
companies to import production equipment or finance overseas
The plan will provide South Korean companies with foreign
currency funds at below commercial rates to invest in domestic
production facilities, overseas buildings and plant, the finance
ministry said in a statement.
A finance ministry official told Reuters of the plan in
December last year, saying terms and other details of the plan
would be decided later.
Under the finalised plan, 16 domestic banks and 12 branches
of foreign banks operating in the country would begin lending
foreign-currency funds to eligible companies from next month for
a maturity of up to 10 years at favourable terms.
The lenders would receive the foreign currency funds from
the government at lower interest rates than they would otherwise
have to pay when borrowing from the markets.
The plan will be effective for one year.
South Korea's foreign-currency reserves stood at a record
$354.54 billion at the end of March. As of the end of February,
South Korea had the world's seventh-largest foreign reserves.
Emerging-market economies including South Korea have boosted
foreign-currency reserves as a defence against capital flight in
times of economic stress, but the growing costs of keeping the
reserves have often been criticised as wasting taxpayers' money.
A finance ministry official said on Tuesday that the
government has no plan to adjust the $10 billion loan ceiling
but could look into it based on actual demand.
(Reporting by Christine Kim; Editing by Choonsik Yoo and Eric