Financial Services Commission's 3rd Supplementary Budget of 4.725 Trillion Won "Liquidity Supply to Overcome COVID-19"

[Asia Economy Reporter Jo Gang-wook] The budget related to financial support for overcoming the novel coronavirus infection (COVID-19) included in the 3rd supplementary budget amounts to a total of 4.725 trillion KRW.

According to the Financial Services Commission on the 4th, the financial services-related projects in the 3rd supplementary budget approved at the National Assembly plenary session the previous day were organized on a scale of 4.725 trillion KRW.

Among them, 1.50323 trillion KRW was allocated to support emergency fund supply for small business owners, small and medium-sized enterprises (SMEs), and mid-sized companies.

To support the 10 trillion KRW scale '2nd phase small business support program' and the 600 billion KRW scale full guarantee program for micro small business owners, 460 billion KRW and 48 billion KRW will be contributed to Shinbo, respectively.

Also, to support a 15 trillion KRW scale loan program targeting SMEs and mid-sized companies facing difficulties due to economic contraction caused by COVID-19, 150 billion KRW and 437.5 billion KRW will be invested in KDB and IBK, respectively.

For Shinbo's special guarantee program of 5.4 trillion KRW to provide emergency liquidity support to SMEs, 427.8 billion KRW will be allocated to Shinbo.

A budget of 3.0327 trillion KRW was also allocated for emergency liquidity support for key industries and companies. This will be done through investment and contributions to KDB, IBK, and the Korea Credit Guarantee Fund.

To promptly establish a special purpose vehicle (SPV) that purchases corporate bonds, commercial papers (CP), and short-term bonds including low credit ratings through role-sharing among the government, Bank of Korea, and KDB, 1 trillion KRW will be invested in KDB. To smoothly operate the Stock Market Stabilization Fund (up to 10.7 trillion KRW) and the Bond Market Stabilization Fund (up to 20 trillion KRW), 319.1 billion KRW and 25.1 billion KRW will be injected into KDB and IBK, respectively.

To support the issuance of 11.7 trillion KRW scale bond collateralized bond obligations (P-CBO) to assist funding for mid-sized and large companies struggling due to COVID-19, 1.4286 trillion KRW will be invested in Shinbo. Additionally, to ensure the smooth progress of rapid underwriting of corporate bonds (2.2 trillion KRW), and purchase of corporate bonds and CP, 174 billion KRW, 21.9 billion KRW, and 64 billion KRW will be contributed to KDB, IBK, and Shinbo, respectively.

Furthermore, 25 billion KRW will be contributed to the Korea Inclusive Finance Agency to expand policy financial supply to low-income and low-credit citizens. The supplementary budget also includes 50 billion KRW for the Korea Asset Management Corporation (KAMCO) to support smooth sales of corporate assets.

The supplementary budget will also be invested in a special guarantee program focusing on the automobile parts industry (100 billion KRW contribution to the Korea Credit Guarantee Fund). Additionally, 100 billion KRW has been allocated to the Agricultural, Fishery, and Forestry Credit Guarantee Fund to support guarantees for farmers and fishermen.

The Financial Services Commission stated, "We will faithfully execute the 3rd supplementary budget to ensure early recovery from the economic crisis and smooth preparation for the post-COVID-19 era."