Legislation aimed at increasing South Korea's import-export lending to support huge new defense sales has stalled amid partisan deadlock ahead of a divisive parliamentary election, officials and analysts said.
South Korea's ruling and opposition parties have both introduced bills to boost the state bank's equity capital to 25 trillion-35 trillion won ($19 billion-$26 billion), raising the lending limit to 10 trillion-14 trillion won, as the country seeks to expedite Poland's $22 billion weapons purchase.
The sale is a key part of South Korea's plan to become the world's fourth-largest defense exporter by 2027. But under current law, the Export-Import Bank of Korea cannot lend more than 40% of its roughly 15 trillion won of equity capital, or about 6 trillion won, to a single borrower.
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