South Korea lifts lending limit to support major arms export deals

But the law change on Thursday will boost the state-run bank's possible equity capital to 25 trillion won ($18.75 billion), eventually raising the lending limit to as much as 10 trillion won. The new limit will help with large defence deals such as the $22 billion in weapons purchases signed with Poland in 2022, South Korea's biggest weapons sale ever.

South Korea's parliament on Thursday passed legislation to ease restrictions on import-export lending to support new defence sales and help the country meet a target to become the world's fourth-largest defence exporter by 2027.

Previously, the Export-Import Bank of Korea was restricted from lending more than 40% of its roughly 15 trillion won of equity capital, or about 6 trillion won, to a single borrower. But the law change on Thursday will boost the state-run bank's possible equity capital to 25 trillion won ($18.75 billion), eventually raising the lending limit to as much as 10 trillion won.

The new limit will help with large defence deals such as the $22 billion in weapons purchases signed with Poland in 2022, South Korea's biggest weapons sale ever. The state bank provided about 6 trillion won in credit during the first phase of the deal. With more abundant financing possible from the state bank, negotiations for the second phase of the deal with Poland may be partly eased, two sources with knowledge of the matter said.

The sources declined to be identified as they were not authorised to speak to media. Warsaw had signed the arms deals with South Korea as part of a drive to build up its military in response to Russia's invasion of Ukraine.

However, there have been concerns over the status of South Korean loans to finance the deals and after changes in the Polish government. ($1 = 1,333.4800 won)

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)