1Q External Debt $485.8 Billion... Up $18.8 Billion from Previous Quarter

Sundae External Debt $464.2 Billion... $16.4 Billion Decrease from Previous Quarter

[Asia Economy Reporter Kwangho Lee] In response to the new coronavirus infection (COVID-19) crisis, banks' efforts to secure foreign currency liquidity led to an increase of $18.8 billion in external debt in the first quarter compared to the previous quarter.

The Ministry of Economy and Finance announced on the 21st, through the '2020 Q1 External Debt Trends and Evaluation,' that external debt in the first quarter reached $485.8 billion, an increase of $18.8 billion from the previous quarter.

Short-term external debt (maturity within one year) was $148.5 billion, up $14 billion from the previous quarter, and long-term external debt (maturity over one year) was $337.3 billion, an increase of $4.8 billion from the previous quarter.

External claims amounted to $950 billion, increasing by $2.5 billion from the previous quarter; however, net external claims (external claims minus external debt) decreased by $16.4 billion to $464.2 billion compared to the previous quarter.

An official from the Ministry of Economy and Finance explained, "This increase in external debt mainly resulted from the banking sector's proactive borrowing in March to secure foreign currency liquidity in response to instability in the international financial market caused by the spread of COVID-19."

He added, "Although this is an inevitable outcome of the government, Bank of Korea, and banking sector's crisis response efforts, it is a temporary phenomenon expected to return to previous levels as the COVID-19 situation improves."

Due to the increase in total external debt and short-term external debt, the proportion of short-term external debt to total external debt (30.6%, +1.8 percentage points) and the ratio of short-term external debt to foreign exchange reserves (37.1%, +4.2 percentage points) rose slightly compared to the previous quarter. However, maintaining a level in the 30% range, which is significantly lower than during past crises, the soundness of external debt is still evaluated as favorable.

This content was produced with the assistance of AI translation services.