South Korea is to launch a fund to help speed up corporate restructuring amid growing jitters about the economic downturn, officials said yesterday.
Financial Services Commission Chairman Chin Dong-soo said a state-run debt clearer would manage the fund to buy bad debt from ailing firms or support their restructuring.
“The government will use every possible means to thwart a system risk [in the financial market],” he said after a special economic meeting chaired by South Korean President Lee Myung-bak.
Chin said the government would start the fund, to be run by Korea Asset Management Corp, sometime after next month.
“We’ll decide on when to launch the fund and the amount needed after monitoring the market situation because there has to be a revision in related law beforehand,” he said.
Banks will also review the finances of 44 conglomerates in April to improve their financial structure through restructuring, he said.
The review is part of the government’s drive to reduce uncertainty in the financial market. Many construction and shipbuilding firms are struggling against a shortage of credit. Officials have said the restructuring fund would be financed by the sale of government-guaranteed bonds.
The government plans to submit a supplementary budget by the end of next month to boost the sagging economy. Local media have reported it would be worth 30 trillion won (US$20.3 billion).