South Korea doubles funds for fighting virus to $80bn

Although the number of new cases in South Korea is dropping steadily, businesses and markets continue to struggle.

    People wearing masks amid the coronavirus outbreak cross a street in downtown Seoul [File: Heo Ran/Reuters]
    People wearing masks amid the coronavirus outbreak cross a street in downtown Seoul [File: Heo Ran/Reuters]

    South Korea has doubled a planned economic rescue package to 100 trillion won ($80bn) to save companies hit by the coronavirus and put a floor under crashing stocks and bond markets.

    The package announced on Tuesday includes 29.1 trillion won ($23bn) in loans to small and medium-sized companies, while another 20 trillion won ($16bn) will be used to buy corporate bonds and commercial paper, used to secure short-term funding, of companies facing a credit crunch, President Moon Jae-in said in an emergency economic policy meeting.

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    The announcement follows similar moves by governments and central banks globally as the world economy buckles under the weight of national shutdowns. On Monday, the United States Federal Reserve, in a drastic move, pledged to back purchases of corporate bonds and buy unlimited amounts of Treasury bonds for the first time to ensure credit flows to corporations and local governments.

    "We will make sure that companies don't go bankrupt from the COVID-19 shocks. Normal, competitive companies will never be shut just because of a temporary liquidity shortage," Moon said in a meeting with finance chiefs and Bank of Korea Governor Lee Ju-yeol.

    South Korean companies are racing to secure lifelines as encouraging self-isolation hits restaurants, airlines, hotels and the entertainment industry in Asia's fourth-largest economy.

    Investors are dumping their holdings of commodities, stocks and riskier bonds, leading to funding constraints for companies.

    South Korea reported 76 new coronavirus cases on Tuesday, maintaining a downward trend in new infections, raising hopes that Asia's largest outbreak outside China may be slowing.

    The daily tally brought the country's total infections to 9,037, according to the Korea Centers for Disease Control and Prevention (KCDC). The death toll rose by two to 120.

    It marked the 13th straight day the country has posted new infections of about 100 or fewer. South Korea on Monday reported its lowest number of new cases since its peak of 909 cases recorded on February 29.

    SOURCE: Reuters news agency