South Korea to expand National Growth Fund to $200 billion, introduce new loan programs

South Korea is set to significantly bolster its National Growth Fund, increasing its scale from 150 trillion won to 200 trillion won over the next five years. This expansion, announced as part of the Financial Services Commission's (FSC) work plan for the latter half of 2026, aims to channel more capital into strategic advanced industries such as semiconductors, artificial intelligence (AI), and biotechnology.

The annual operational scale of the fund will rise from 30 trillion won to 40 trillion won. Investment targets will also broaden beyond the current 12 advanced industries to include future strategic sectors like space and aerospace. To support long-term investments in core technologies, a new entity, the Korea Strategic Technology Partners (KSTP), will be established. This specialized operator, funded jointly by policy financial institutions like the Industrial Bank of Korea and private financial firms, will allocate up to 10 trillion won over five years to technologies and industries requiring over a decade of investment, such as quantum computing and offshore wind power.

In addition to these measures, an 880 billion won 'Super Long-Term Technology Investment Fund' will be created to provide equity financing for tech companies whose investments may take over 10 years to recoup. For early-stage startups lacking collateral or credit, a 'Startup Build-up Guarantee Loan' will be launched in August, offering initial support of up to 100 million won, with the potential to increase to 200 million won over two years based on growth potential. Principal repayment can be deferred for three years after the program concludes.

Financial support for vulnerable populations will also be expanded. A new long-term, small-amount loan of 1 million won will be introduced for low-income individuals with poor credit, offered at an annual interest rate of 4.5% and repayable over 10 years with monthly payments of approximately 10,000 won. This initiative includes connecting borrowers with welfare and employment support services and offering pathways to larger policy loans or bank loans for those who repay diligently.

To stimulate regional economies, a plan is underway to allow the conversion of membership points accumulated from credit card companies and other sources into local currency. Furthermore, a 200 billion won loan program with reduced interest rates (up to 1.5 percentage points lower) will be available for promising startups founded by young entrepreneurs. To assist young individuals with limited credit history, the use of non-financial information, such as mobile phone payment records, will be expanded to facilitate credit card issuance.