S. Korea to take stabilization measures if volatility grows in bond market

All News 11:08 June 12, 2020

SEJONG, June 12 (Yonhap) -- South Korea will take swift measures to stabilize the bond market if volatility grows, a senior finance ministry official said Friday, as the government hiked bond issuance to revive economic growth amid the coronavirus pandemic.

South Korea has increased its capacity of selling treasury bonds to 167.8 trillion won (US$139 billion) this year, from an initial ceiling of 130.2 trillion won, to cope with the pandemic.

Yang Choong-mo, a deputy finance minister, said fiscal policy should assume a leading role to protect jobs and help companies stay afloat at a time when the pandemic is dealing a heavy blow to the economy.

"If market volatility increases, the government will swiftly take market stabilization measures," Yang told a meeting with bond experts.

Earlier this month, the government proposed its third extra budget worth 35.3 trillion won to help key industries cushion the economic blow from the coronavirus pandemic and protect jobs.

Along with the third extra budget, the size of the stimulus packages increased to 270 trillion won,

South Korea's economy contracted 1.3 percent in the January-March period from the previous quarter, marking the worst quarterly drop since the final quarter of 2008, when it shrank by 3.3 percent.

South Korea's export-reliant economy is expected to suffer a bigger setback from the pandemic, as the novel coronavirus has disrupted global businesses and ravaged consumer demand.