External Debt Q3 2022

 

External Debt Amounts to US $639.0 Billion in Q3 and Soundness Indicators Improve

 

 

Korea’s external debt amounted to US $639.0 billion as of the end of September, decreasing by US $23.1 billion from the end of the previous quarter.

- Short-term debt: US $170.9 billion, down US $12.9 billion quarter-on-quarter

- Long-term debt: US $468.0 billion, down US $10.1 billion quarter-on-quarter

 

External Debt, Q3 2022

(US $billion)

	2020	2021			2022			Change (q-o-q)
					Q1	Q2	Q3
Total debt	550.6	632.4			654.1	662.0	639.0	-23.1
-Short-term	160.1	164.7			174.9	183.8	170.9	-12.9
-Long-term	390.6	467.7			479.2	478.2	468.0	-10.1

*Source: International Investment Position (IIP) Q3 2022 (preliminary, Bank of Korea, November 23, 2022)

 

Government borrowings (down US $11.1 billion) and central bank borrowings (down US $5.5 billion) went down mainly due to foreign-owned long-term Korea Treasury Bonds (KTBs) and Monetary Stabilization Bonds (MSBs) (down US $13.3 billion) whose dollar equivalents were reduced because of a strong dollar. Borrowings by banks (down US $6.6 billion) dropped due to a significant decline in short-term foreign currency borrowings (down US $12.9 billion) caused by reduced attractiveness of arbitrage transactions. Borrowings by other sectors (up US $200 million) grew due to a slight increase in private short-term trade credit (up US $1 billion) that puts relatively less burden of debt repayment on borrowers.

 

In the third quarter, external debt soundness indicators improved with both short- and long-term debt turning to decrease.

- The ratio of short-term external debt to total external debt fell compared to the previous quarter with the contraction of short-term external debt (down 7.0 percent) surpassing that of long-term debt (down 2.1 percent)

- Despite a decline in foreign exchange reserves (down US $21.5 billion), the ratio of short-term debt to foreign exchange reserves decreased by 0.9 percentage points to 41.0 percent due to a sizable reduction in short-term debt (down US $15.8 billion), which is the largest in 11 years.  

 

Local commercial banks have adequate capacity to repay external debt with their liquidity coverage ratio standing at 126.6 percent as of the end of September, which was far higher than a regulatory ratio of 80 percent. 

Net external assets in debt instruments (total external asset in debt instruments – total external debt) came to US $379.6 billion, down US $6.50 billion from the end of the previous quarter.

 

Short-term External Debt and External Assets in Debt Instruments

 

(%, %p, US $billion)

	2020	2021			2022			Change (q-o-q)
					Q1	Q2	Q3
Ratio of Short-term Debt to Total External Debt	29.1	26.0			26.7	27.8	26.8	-1.0¹
Ratio of Short-term Debt to Foreign Exchange Reserves	36.1	35.6			38.2	41.9	41.0	-0.9¹
External Assets in Debt Instruments	1,034.4	1,080.3			1,079.8	1,048.2	1,018.6	-29.6
Net External Assets in Debt Instruments	483.8	447.9			425.7	386.1	379.6	-6.5

1. %p

*Source: International Investment Position (IIP) Q3 2022 (preliminary, Bank of Korea, November 23, 2022)

 

The government will make continuous efforts to manage external soundness by closely monitoring trends of capital inflow and outflow and the external debt maturity structure.

Please refer to the attached pdf.