External Debt Q3 2021

 

External Debt Amounts to US $610.8 Billion in Q3,

Short-term Debt Falling at 10-year Mark

 

 

Korea’s external debt amounted to US $610.8 billion as of the end of September, rising US $6.6 billion from the previous quarter.  Short-term debt dropped most in 10 years amid a strong dollar, while long-term debt increased due to foreign purchases of the nation’s long-term bonds and larger IMF SDR allocated to the economy.

 

- Short-term debt: US $164.6 billion, down US $13.4 billion quarter-on-quarter

- Long-term debt: US $446.2 billion, up US $20.0 billion quarter-on-quarter

 

External Debt, Q3 2021

(US $billion)

	2019	2020			2021			Change (q-o-q)
		Jun	Sept	Dec	Mar	Jun	Sept
Total debt -Short-term -Long-term	470.7 135.5 335.3	506.7 156.2 350.5	514.3 146.1 368.2	544.9 159.3 385.6	565.9 165.7 400.2	604.2 178.0 426.2	610.8 164.6 446.2	6.6 -13.4 20.0

* Source: International Investment Position (IIP) at the end of September 2021 (preliminary, Bank of Korea, November 18, 2021)

 

Government borrowings (up US $0.4 billion), central bank borrowings (up US $11.6 billion) and non-bank borrowings (up US $4.4 billion) went up, while borrowings by banks (down US $9.8 billion) fell.  

 

Government borrowings increased due to foreign purchases of government debt (up US $2.6 billion), central bank borrowings went up with new IMF SDR added (up US $11.6 billion), and non-bank borrowings rose mainly due to securities offerings (up US $3.4 billion).  Borrowings by banks declined, led by short-term debt (down US $7.8 billion). 

 

Quality of debt

 

Taking into account new IMF SDR added to external debt, the country’s real debt decreased in the third quarter by US $5.0 billion.  Short-term debt declined most in 10 years, and the ever-rising long-term debt will unlikely affect the country’s financial soundness given that the debt is mostly won-denominated.

 

Soundness

 

External debt soundness improved.  The ratio of short-term external debt to total external debt dropped 2.5 percentage points to 26.9 percent, the lowest since the second quarter of 2016, and the ratio of short-term external debt to foreign exchange reserves went down 3.7 percentage points to 35.5 percent, which is lower than the 2010-2020 average. 

 

Solvency

 

Net foreign assets in debt instruments (total external assets in debt instruments－total external debt) increased for the first time in three quarters, going up US $7.7 billion to US $464.6 billion. 

 

Short-term External Debt and External Assets in Debt Instruments

 

(%, %p, US $billion)

	2019	2020			2021			Change (q-o-q)
		Jun	Sept	Dec	Mar	Jun	Sept
Ratio of Short-term Debt to Total External Debt	28.8	30.8	28.4	29.2	29.3	29.5	26.9	-2.5¹
Ratio of Short-term Debt to Foreign Exchange Reserves	33.1	38.0	34.7	36.0	37.1	39.2	35.5	-3.7¹
External Assets in Debt Instruments	957.2	955.7	977.2	1,027.8	1,030.7	1,061.1	1,075.4	14.3
Net External Assets in Debt Instruments	486.4	449.0	462.8	482.8	464.8	456.9	464.6	7.7

1. %p

 

The government will keep its close monitoring of external debt situations as uncertainties are growing in the global financial market amid the US tapering seemingly around the corner and major economies talking about monetary policy normalization.

 

Please refer to the attached pdf