The government expanded next year's trade insurance limit for medium- to long-term deferred payment export transaction to a record 40 trillion won to strengthen support for large, long-term export projects in sectors such as shipbuilding and defense that exceed two years. This is twice the size of this year and is in step with the expected shipbuilding boom driven by strong defense exports to Europe and the U.S. "MASGA (Make American Shipbuilding Great Again)" project. Because long-term transactions carry high risks such as importer defaults and geopolitical instability, the government intends to actively support them and use them as a growth engine.
According to the government on Oct. 19, the Ministry of Trade, Industry and Energy recently submitted to the National Assembly a motion seeking consent for the "2026 trade insurance contract conclusion limit." The total limit for trade insurance contract conclusions next year is 310 trillion won, up 30 trillion won from this year's 280 trillion won.
Of that, the limit related to medium- to long-term deferred payment export transaction increased by 20 trillion won, from 20 trillion won this year to 40 trillion won next year. The remaining 10 trillion won increase was added to the short-term export company support capacity (270 trillion won) to respond to the tariff war triggered by U.S. President Donald Trump.
A medium- to long-term deferred payment export transaction refers to a transaction in which export proceeds are not received immediately but are received in installments over a set period. Exports of capital goods such as equipment, plants, and machinery to developing countries are mainly conducted in the form of deferred payment exports.
The Korea Trade Insurance Corporation (K-sure) has been supporting medium- to long-term exports by providing loan financing to compensate for the structural constraint of the long period required to receive the full export payment. Representative programs include medium- to long-term export insurance (compensation for losses from uncollected export proceeds exceeding two years) and overseas project finance insurance (compensation when a financial institution cannot recover loans for overseas projects).
It is the first time in 16 years, since 2009 (35 trillion won), that the trade insurance limit for medium- to long-term deferred payment export transaction has risen so sharply. At that time, the government significantly increased the limit by about 10 trillion won to boost exports in the wake of the global financial crisis. After maintaining the 19 trillion to 30 trillion won range in the 2010s, it was reduced to as low as 1.78 trillion won in the early 2020s. It was 20 trillion won for two consecutive years in 2024 and this year.
The ministry expects that about 26 trillion won of trade insurance will be provided for medium- to long-term deferred payment export transaction by the end of this year. Although the cumulative amount was only 6 trillion won from January to July, it expects a sharp increase of about 20 trillion won in areas such as defense and shipbuilding from August to December. The approximately 6 trillion won exceeding the limit will be covered by this year's provisional limit (25 trillion won).
In the defense industry, Hyundai Rotem signed a second contract worth about 9 trillion won with Poland in August for K2 tanks, and the government expects this momentum to continue next year. A government official said, "Including the Poland case, there are significant projects currently under review," and added, "We are keeping specific cases confidential due to nondisclosure agreements."
In addition, in shipbuilding, which is experiencing a global order boom, investment in the U.S. is expected to expand through the Korea-U.S. shipbuilding cooperation project "MASGA." Beyond "ship finance" to support large corporations, there is also strong demand for special RG (advance payment refund guarantee) guarantees for small and midsize companies. An official at the Trade Insurance Corporation noted, "Large projects are reportedly being reviewed in industries such as batteries and telecommunications."
The government's sharp increase in the limit for medium- to long-term deferred payment export transaction reflects its intention to take on risk and use it as a driver for an economic rebound despite an uncertain trade environment. With concerns rising over a slowdown in export growth due to the tariff war and other factors, the strategy is to leverage large, project-type exports as a new growth pillar.
A government official said, "Trade insurance tends to be used extensively as the economy moves from a downturn toward recovery," adding, "We intend to support corporations by preemptively preparing for investment in the U.S. and the upsizing of projects."