Declining Assistance
The Export-Import Bank of Korea (Korea Eximbank) is planning to provide less export financing subsidies in 2016 than it did this year. The year-on-year decrease in this amount is a first since 1976, when the bank was founded.
According to the Ministry of Strategy & Finance and other industry sources, Korea Eximbank recently submitted a plan to the ministry to spend 75 trillion won (US$64 billion) to that end next year. The amount is approximately 5 trillion won less than this year’s. In 2015, the amount reached a new high of 80 trillion won. In addition, it can be said that the actual decrement amounts to more than six trillion won, in that 1.25 trillion won was additionally included in the budget in the middle of this year for an economic recovery.
The bank is looking to reduce the performance guarantee part to a large extent, while slightly increasing the loan and investment portions. “By industry, more than half of the subsidies are scheduled to go to overseas construction, plant construction, shipbuilding, natural resources development and the like,” the bank explained.
“The total subsidy amount has been reduced in view of the decline in performance guarantee demand that followed long-term recessions in these sectors,” the bank added.