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, the Ministry of Economy and Finance said on May 21.
Of the total, short-term debt amounted to US$148.5 billion, up US$14.0 billion quarter-on-quarter, while long-term debt accounted for US$337.3 billion, down US$4.8 billion on quarter.
External debt increased from the previous quarter as banks expanded borrowings in March amid the financial market volatility due to the COVID-19 pandemic, the ministry said.
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 (upUS $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.
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.
"Korea's current short-term external debt is lower compared to global financial crisis and external soundness indicators remain stable in the 30 percent range," said Kim Yong-beom, first vice minister of economy and finance.
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.
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, the ministry said.