External Debt Q1 2022
External Debt Amounts to US $654.1 Billion in Q1, Soundness Indicators Remaining Stable
Korea’s external debt amounted to US $654.1 billion as of the end of March, rising US $21.7 billion from the previous quarter. Debt growth in Q1 2022 expanded from US $17.5 billion in Q4 2021.
- Short-term debt: US $174.9 billion, up US $10.2 billion quarter-on-quarte
- Long-term debt: US $479.2 billion, up US $11.5 billion quarter-on-quarter
External Debt, Q1 2022
(US $billion)
|
|
2019 |
2020 |
2021 |
2022 |
Change
(q-o-q) |
|
Q1 |
Q2 |
Q3 |
Q4 |
Q1 |
|
Total debt |
470.7 |
550.6 |
570.0 |
607.2 |
614.9 |
632.4 |
654.1 |
21.7 |
|
-Short-term |
135.5 |
160.1 |
164.9 |
176.1 |
163.5 |
164.7 |
174.9 |
10.2 |
|
-Long-term |
335.3 |
390.6 |
405.1 |
431.0 |
451.4 |
467.7 |
479.2 |
11.5 |
*Source: International Investment Position (IIP) Q1 2022 (preliminary, Bank of Korea, May 25, 2022)
Government borrowings (up US $7.2 billion) went up mainly due to foreign investment in government bonds (up US $5.9 billion). Borrowings by banks (up US $10.8 billion) increased due to securities issuance (up US $5.3 billion) and foreign currency borrowings (up US $4.4 billion). Borrowings by other sectors rose mainly due to securities issuance (up US $2.8 billion) and trade credit (up US $0.7 billion). On the other hand, central bank borrowings fell as foreign investment in monetary stabilization bonds declined.
Soundness
Although the ratio of short-term external debt to total external debt increased with the growth of short-term external debt (6.2 percent, q-o-q) surpassing that of the long-term debt (2.5 percent, q-o-q), the ratio remained 26.7 percent, lower than the average of the past 10 years at 28.7 percent. In addition, the ratio of short-term debt to foreign exchange reserves went up by 2.6 percentage points to 38.2 percent, which is still lower than that of other emerging economies.
Quality of Debt
External debt expanded due to an increase in demand for preemptive financing to brace for the shock from the US Feds’ interest rate hike. Moreover, rising foreign investment in treasury bills[1] and issuance of global bonds in large amounts by Korean policy banks[2] accounted for unusual factors.
Solvency
Net foreign assets in debt instruments (total external asset in debt instruments – total external debt) came to US $425.7 billion, down US $22.2 billion from the end of the previous year.
Short-term External Debt and External Assets in Debt Instruments
(%, %p, US $billion)
|
|
2019 |
2020 |
2021 |
2022 |
Change
(q-o-q) |
|
Q1 |
Q2 |
Q3 |
Q4 |
Q1 |
|
Ratio of Short-term Debt to Total External Debt |
28.8 |
29.1 |
28.9 |
29.0 |
26.6 |
26.0 |
26.7 |
0.7¹ |
|
Ratio of Short-term Debt to Foreign Exchange Reserves |
33.1 |
36.1 |
37.0 |
38.8 |
35.2 |
35.6 |
38.2 |
2.6¹ |
|
External Assets in Debt Instruments |
957.2 |
1,034.4 |
1,063.4 |
1,063.3 |
1,078.2 |
1,080.3 |
1,079.8 |
-0.5 |
|
Net External Assets in Debt Instruments |
486.4 |
483.8 |
466.4 |
456.2 |
463.3 |
447.9 |
425.7 |
-22.2 |
1. %p
The government will make utmost efforts to extend the maturity structure of external debt by discussing the issuance of long-term external debt with public institutions.
[1] Treasury bills began to be reissued from February 2022, after being fully repaid at the end of last year.
[2] The Export-Import Bank of Korea issued dollar-dominated bonds worth around US $3 billion on January 6, 2022, the largest bond issuance by Korean institutions other than government agencies.
Please refer to the attached pdf.
