External Debt, Q1 2020

 

External Debt Amounts to US $485.8 Billion,

Soundness Indicators Staying in 30 Percent Range

 

 

Korea’s external debt amounted to US $485.8 billion as of the end of March 2020, rising US $18.8 billion from the previous quarter.

 

- Short-term debt: US $148.5 billion, up US $14.0 billion quarter-on-quarter

- Long-term debt: US $337.3 billion, down US $4.8 billion quarter-on-quarter

 

External Debt, Q1 2020

(US $billion)

	2008	2010	2015	2018	2019			2020	Change (q-o-q)
					Jun	Sept	Dec	Mar
Total debt -Short-term -Long-term	314.1 146.8 167.2	354.7 135.0 219.7	396.1 104.3 291.7	441.2 125.6 315.6	462.8 138.9 323.9	460.2 133.5 326.6	467.0 134.5 332.5	485.8 148.5 337.3	18.8 14.0 4.8

* Source: International Investment Position (IIP) at the end of March 2020 (preliminary, Bank of Korea, May 21, 2020)

 

External debt increased from the previous quarter as banks expanded borrowings in March amid the financial market volatility due to the COVID-19 pandemic.

 

Borrowings by banks (up US $13.3 billion) rose due to the short-term borrowings by local commercial banks (up US $6.5 billion), as well as borrowings by foreign bank branches in Korea from their headquarters (up US $6.0 billion).  Government borrowings (up US $3.5 billion) went up as foreign investment in Korea treasury bonds rose.  Central bank borrowings (down US $1.3 billion) declined as foreign investment in the Monetary Stabilization Bonds fell.  Borrowings by the other sector (up US $3.4 billion) rose due to an increase in long-term corporate bonds issued in foreign currencies (up US $2.4 billion) amid the global financial market volatility between January and February. 

 

Soundness

 

External debt soundness indicators remained stable in the 30 percent range as the ratio of short-term external debt to total external debt rose 1.8 percentage points to 30.6 percent and the ratio of short-term external debt to foreign exchange reserves increased 4.2 percentage points to 37.1 percent.

 

Solvency

 

Net foreign assets in debt instruments (total external assets in debt instruments－total external debt) stood at US $464.2 billion, down US $16.4 billion from the previous quarter.

 

Short-term External Debt and External Assets in Debt Instruments

 

(%, %p, US $billion)

	2008	2010	2015	2018	2019			2020	Change (q-o-q)
					Jun	Sept	Dec	Mar
Ratio of Short-term Debt to Total External Debt	46.8	38.0	26.3	28.5	30.0	29.0	28.8	30.6	1.8¹
Ratio of Short-term Debt to Foreign Exchange Reserves	73.0	46.3	28.3	31.1	34.5	33.1	32.9	37.1	4.2¹
External Assets in Debt Instruments	340.6	450.6	720.5	918.8	942.8	942.3	947.6	950.0	2.5
Net External Assets in Debt Instruments	26.5	95.9	324.5	477.6	479.9	482.1	480.6	464.2	-16.4

1. %p

 

The government will work to increase foreign exchange liquidity as uncertainties hover over the global financial markets.  However at the same time, the government will closely monitor the country’s external debt situation and work for the indicators to recover to the pre-crisis level when the pandemic has gone.

 

Please refer to the attached pdf