Gov't to provide $61.5 billion for construction, arms deals through 2028

Finance Minister Choi Sang-mok, center, speaks during an economic ministerial meeting held at the government complex in central Seoul on Thursday. [MINISTRY OF ECONOMY AND FINANCE]

The government will provide 85 trillion won ($61.5 billion) in export financing to secure large-scale construction and arms deals through 2028, the Ministry of Economy and Finance said.

The announcement took place Thursday during an economic ministerial meeting held at the government complex in central Seoul as part of a strategic operation plan for the state-run Export-Import Bank of Korea (Korea Eximbank).

“The government has proactively expanded funds by upping the capital limit of Korea Eximbank, establishing a fund dedicated to the supply chain management and expanding the budget for the Economic Development Cooperation Fund,” said Finance Minister Choi Sang-mok in his remarks during the meeting.

“The government will further diversify funding channels by setting up a new program to support large-scale projects and establishing the ‘K-Finance Package,’ which will be utilized for development cooperation.”

The latest operation plan includes supplying 85 trillion won in export financing for overseas projects in sectors such as infrastructure, nuclear energy and defense over the next five years, leveraging Korea Eximbank's upped funding capacity. The planned amount is 53.1 percent higher than the 55.5 trillion won provided over the past five years.

The bank plans to execute 15 trillion won this year alone.

The statutory capital limit of the state-owned bank expanded from its previous 15 trillion won to 25 trillion won in February. The increase is intended to help domestic exporters, especially arms dealers and construction companies, secure large deals.

The government also raised its five-year financial support target in sectors including semiconductors, EV batteries and biotech from 45 trillion won to 50 trillion won.

Moreover, the proposed K-Finance Package is designed to utilize both public and private funding for major overseas development projects. State-run funds will cover less profitable subprojects while private companies will manage more fruitful businesses.

Saudi Arabia's mega-scale NEOM project is a priority.

“The government will bolster [Korea’s] fundamentals for export and sales by focusing our resources on supporting key projects for which deals are expected to be signed in the latter half of the year,” said Choi.

“G2G [government-to-government] cooperation will be strengthened so that Korean companies will be able to secure a competitive edge in mega-scale projects such as Saudi Arabia’s NEOM.”

Korea announced its goal of securing the world's most expansive free trade partnerships by 2027 as part of its dynamic economy road map.

Korea has signed 21 free trade agreements with 59 countries that account for 85 percent of the world’s combined GDP. By that metric, the country sis second only to Singapore at 87 percent, according to the Finance Ministry.

“Global uncertainties in the trading environment are growing due to the U.S.-China conflict, the restructuring of the global supply chain and stricter trading rules,” noted the minister.

The government aims to further extend and bolster its economic ties with emerging countries and partners in the Indo-Pacific region and to foray into new markets in the southern hemisphere.

BY SHIN HA-NEE [shin.hanee@joongang.co.kr]