Declining Short-term Debt
It has been found that South Korea’s short-term foreign debts with a maturity of one year or less hit a 117-month low in March this year. In addition, the ratio of such short-term foreign debts to its total external liabilities reached as low as 26.6% in that month, about half of that during the most recent global financial crisis.
The Ministry of Strategy & Finance and the Bank of Korea announced on May 25 that the total of the short-term debts decreased by US$4.3 billion quarter on quarter to US$102.8 billion in the first quarter of this year while that of the debts with a maturity exceeding one year fell US$5.3 billion to US$283 billion.
The ratio of short-term liabilities to total debts fell from 27.1% to 26.6% between the end of December 2015 and the end of March 2016 and the ratio of short-term liabilities to foreign exchange reserves reached 27.8%, the lowest since the end of 2004.
Such declines recorded in the first quarter can be attributed to South Korean commercial banks’ repayment of their borrowings that has continued since the second half of last year and a decline in private-sector companies’ trade credits due to import drop, which accounted for US$3.8 billion and US$2.8 billion, respectively. In the meantime, South Korea’s net foreign credit as of the end of March this year totaled an all-time high of US$344.9 billion.