[Financial Microscope] Financial Sector to Contribute 1.5 Trillion Won to Korea Credit Guarantee Fund Next Year, Up 120 Billion Won from This Year

Statutory Contributions: 1.3793 Trillion Won; Private Contributions: 154.5 Billion Won
Total of 1.5338 Trillion Won, Up 124.2 Billion Won From This Year
Government Contributions to Fall From 130 Billion Won to 50 Billion Won
Korea Credit Guarantee Fund to Expand Guarantees to 79 Trillion Won Next Year

In 2027, contributions from the financial sector to the Korea Credit Guarantee Fund are estimated to exceed 1.5 trillion won, up about 120 billion won from 2026. These contributions are funds that financial institutions, including banks, pay to share lending risks with guarantee institutions, and serve as a form of risk-sharing payment. The increase appears to reflect growing demand among financial institutions to reduce the risks associated with corporate lending, as the government pushes to expand productive finance.

According to relevant government agencies on Oct. 21, contributions to the Korea Credit Guarantee Fund from the financial sector are estimated to total 1.5338 trillion won in 2027, comprising 1.3793 trillion won in statutory contributions and 154.5 billion won in private contributions. This is 124.2 billion won, or 8.8%, more than the 1.4096 trillion won projected for 2026.

Statutory contributions are funds that banks and other financial institutions pay to the Korea Credit Guarantee Fund, based on a set percentage of their outstanding loans and in accordance with the prescribed contribution rate. Statutory contributions in 2027 are expected to rise by 72.8 billion won, or 5.6%, from 1.3065 trillion won in 2026. Compared with the actual amount collected in 2025, 1.3024 trillion won, this represents an increase of 76.9 billion won. Since statutory contributions are calculated based on factors including outstanding loan balances, the increase appears to reflect growth in corporate lending.

Private contributions, which financial institutions pay under separate agreements with the Korea Credit Guarantee Fund, are set to rise more sharply. They are expected to increase by 51.4 billion won, or 49.9%, from 103.1 billion won in 2026 to 154.5 billion won in 2027.

Private contributions are used to fund guarantee support under separate agreements with the Korea Credit Guarantee Fund. Through special contributions and other measures, banks can support lending to small and medium-sized enterprises while sharing the risk of losses from defaults with the fund. The fund applies guarantee coverage ratios of 90% to 100% for three years to guarantees under agreements in which financial institutions make special contributions or provide support for guarantee fees. This allows banks to reduce the risk of failing to recover principal on corporate loans through the fund's guarantees. As the government pursues productive finance, with a focus on expanding corporate lending, demand among financial institutions to share lending risks by using the fund's guarantees appears to have grown.

Government contributions, by contrast, are set to decline. The planned amount for 2027 is 50 billion won, down 80 billion won, or 61.5%, from the 130 billion won allocated for 2026, including a supplementary budget. It is also half the 100 billion won actually contributed in 2025.

Financial authorities say, however, that year-to-year fluctuations are unavoidable because government contributions are not made at a fixed level every year. The fund's main source of financing is contributions from financial institutions, while government contributions vary depending on factors such as additional fiscal programs to respond to crises and supplementary budget allocations. If a crisis such as the war in the Middle East creates a need to expand guarantees for affected businesses, the government can provide additional funding through a supplementary budget or other measures.

With the increased contributions and other resources, the Korea Credit Guarantee Fund plans to manage a total guarantee volume of 79.1117 trillion won in 2027. After reducing the guarantee volume that had expanded during the COVID-19 response, it plans to raise it again to a level close to 80 trillion won. This is 2.6117 trillion won more than the 2026 target of 76.5 trillion won. It is also an increase of 1.1342 trillion won compared with the fund's internal forecast of 77.9775 trillion won for 2026.

This content was produced with the assistance of AI translation services.