Eximbank’s capital limit likely to increase this year to boost defense exports

Korean President Yoon Suk Yeol [Courtesy of the Office of the President]

A bill to increase the Export-Import Bank of Korea (Korea Eximbank)’s statutory capital limit is expected to be passed by the National Assembly this year. The country’s main opposition party, following the ruling party, also proposed a bill to raise the capital limit, clearing the way for a vote in the National Assembly. The move is expected to green light Korea’s defense exports, particularly to Poland and dispels concerns that large-scale exports could be canceled due to the bank’s lack of financial support.

According to sources from the National Assembly on Tuesday, Yang Ki-dae, a lawmaker from the main opposition Democratic Party, recently introduced a bill to amend the Export-Import Bank of Korea Act to raise the bank’s capital limit from the current 15 trillion won ($11.08 billion) to 35 trillion won. This is 5 trillion won more than the limit of 30 trillion won in a bill previously proposed by the ruling People Power Party. “As concerns about a global economic downturn continue to rise, the demand for various policy financing from our companies expanding overseas is likely to increase,” Yang said, explaining the reasoning behind the amendment as the opposition party introduces a bill to raise the capital limit for the first time. A government official said, “There seems to be no disagreement between the ruling and opposition parties on increasing the capacity to support exports as Korea relies on exports.”.

With the ruling and opposition parties in agreement on the need to increase Korea Eximbank’s capital limit, the probability of the bill being passed by the National Assembly within the year is high and is expected to give a boost to defense exports to Poland, which have been slow in recent years. As of May 2023, the balance of capital at Korea Eximbank stood at 14.8 trillion won, close to the current limit of 15 trillion won. The capital limit has remained unchanged for nearly a decade after being raised to 15 trillion won from 8 trillion won in 2014.

Meanwhile, Korean President Yoon Suk Yeol attended the Seoul International Aerospace and Defense Exhibition (Seoul ADEX) 2023, held at Seoul Air Base in Seongnam, Gyeonggi Province on the same day, where he pledged continued support for the country’s defense industry. “The defense industry is a national strategic industry that supports our security and economy.”

“Moving forward, the government will create an ecosystem that allows the defense industry to continue to grow and enhance its global competitiveness,” Yoon added, pledging to share the country’s experience of defense industry growth with friendly countries and establish a defense security cooperation system.