South Korea has decided to finance its $200 billion US investment package through foreign-exchange earnings and newly issued government-guaranteed bonds, in a move designed to support strategic US projects while insulating the Korean economy from financial risk.
According to government and the ruling party sources on Thursday, the Ministry of Economy and Finance and the Bank of Korea have agreed to raise up to $20 billion a year for the 20-year investment program by diverting interest and dividend income from the country’s $422 billion in foreign reserves and issuing dollar-denominated bonds through a new, government-backed US investment fund.
The plan was finalized after an emergency review of Korea’s foreign-exchange operations and liquidity conditions.
The structure aims to avoid tapping state fiscal resources or disturbing foreign-exchange markets.
On Wednesday, Korean President Lee Jae Myung and US President Donald…
