Short-term Debt

Korea’s financial soundness has improved significantly with the ratio of short-term debts to the total external liabilities hitting a 13-year low. Also, it has been found that the country’s amount of accounts receivable is larger than that of accounts payable.

According to the Bank of Korea’s interim international investment position data published on February 20, Korea’s foreign credit and liabilities have increased by US$39.2 billion and US$14.7 billion to US$535.9 billion and US$413.4 billion, respectively. This is the first time that the amounts exceeded US$500 billion and US$400 billion each. The increase is because the reserve assets of the monetary authorities have risen by US$20.6 billion.

The growth was more conspicuous in short-term than long-term debts, US$27.9 billion vs. US$11.3 billion. The short-term debts have decreased to US$126.7 billion as deposit takers’ repayment of short-term borrowings increased to US$10.7 billion. The ratio of short-term debts has decreased from 34.5% to 30.6% since 2011 to come close to the level of 1999 at 29.7%.

Meanwhile, the long-term foreign debts have surged by US$25.4 billion with the demand for Korea’s treasury and currency control bonds going up in the wake of the credit rating upgrade and more foreign bonds being issued by private-sector companies.

Under the circumstances, Korea’s net foreign liabilities have increased US$24.5 billion to add up to US$122.5 billion, which is the highest since the US$155.7 billion recorded in 2006. It means that its foreign credit is US$122.5 billion larger than the amount of foreign debts.

As of the end of 2012, the country’s overseas investment balance increased US$88.3 billion won year on year to US$842 billion. During the same period, the balance of foreign investment grew US$106.8 billion to US$945 billion, driven more by non-transaction factors (US$75 billion) such as stock price increase and the appreciation of the won than by transaction-related factors (US$31.8 billion).

Copyright © BusinessKorea. Prohibited from unauthorized reproduction and redistribution