The South Korea government and the General Motors negotiations continue to stiffen these past days. Reports revealed that the auto company is looking to ax several numbers of executives as one of their final attempts to salvage the loss-making business.
Furthermore, the auto company is looking to negotiate with the local South Korean government their recent proposal to switch its debt for equity in exchange for financial support. The company is looking to hold on to their operations in the country with the help of the government.
According to reports regarding the South Korean government’s response, they are still looking to have an audit of what the GM SK’s “opaque” management.
The government then will look to ensure that they are not going to waste any of the country’s funds to safeguard GM’s plant.
Moreover, the local government is looking at the high-interest rates that General imposes for its sudden downfall and the immense amount of losses their plant continues to produce; this and the struggling numbers of exports are seen as the major flaws the company looks to tackle.
On a recent interview with the General Motors Korea’s board member, they mentioned that “Board members asked for interest rate cuts at almost every meeting, but GM turned a deaf ear,”
This has been a prevalent problem that the company had as records showed that the company has indeed resisted such propositions; the local officials advised the company to slice their current interest rate which was hitting a whopping $3 billion in loans on numerous occasions.
South Korea Rates Steady
Looking at the country’s recent debacle, they announced that they are looking to keep their interest rates on hold. According to the Bank of Korea Governor Lee Ju-yeol, the country doesn’t need to imitate and follow the global withdrawal of stimulus measures.
The governor managed to keep their outlook the same and keep their consensus view the same. The market can expect that tightened monetary policy from the country following their last hike last November which was about 1.50%.
Governor Lee noted that “South Korea’s monetary policy is not decided automatically based on the monetary policy of the United States. Going forward, we will make our policy decisions comprehensively by looking at the economy, inflation, and U.S. monetary policy,”
Analyst Kang Seung-won noted that “It seems Lee was being extra careful with his words, more so than other times because it was his last (rate decision event), out of concern that if he gives any clarity on future policy moves, it could limit policy room for the next governor,”
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