Last Year, External Debt Surpassed $600 Billion... Short-term External Debt Ratio Hits Lowest in 6 Years

MoEF, '2021 Year-End External Claims and Liabilities Trends and Evaluation' Released
2021 Year-End External Debt at $628.5 Billion, Up $83.6 Billion YoY... Short-Term External Debt Ratio at 26.4%

[Asia Economy Sejong=Reporter Kwon Haeyoung] Last year, foreign investment in bonds flowed in at a record high, pushing South Korea's external debt beyond 600 billion dollars. The proportion of short-term external debt with a maturity of one year or less recorded the lowest level since 2015.

According to the '2021 Year-End External Claims and Liabilities Trends and Evaluation' data released by the Ministry of Economy and Finance on the 23rd, as of the end of last year, external debt was recorded at 628.5 billion dollars, an increase of 83.6 billion dollars compared to the end of the previous year (544.9 billion dollars).

External debt surpassed 400 billion dollars at the end of 2017 (412 billion dollars) and took three years to exceed 500 billion dollars by the end of 2020 (544.9 billion dollars). After that, it surpassed 600 billion dollars again within one year.

The government analyzed that this reflected the positive outlook of overseas investors toward the Korean economy. A Ministry of Economy and Finance official explained, "The increase in external debt last year was mainly due to the rise in long-term external debt, such as foreign investment in Korean won bonds and domestic institutions issuing foreign currency bonds," adding, "The increase in short-term external debt was the lowest since 2016, indicating sound external debt health."

Short-term external debt with a maturity of one year or less increased by 6.9 billion dollars to 166.2 billion dollars. The increase of 450 million dollars since 2016 was the smallest. Accordingly, the proportion of short-term external debt in total external debt fell by 2.8 percentage points to 26.4%, the lowest level since 2015. The ratio of short-term external debt to foreign exchange reserves decreased by 0.1 percentage points from the previous year to 35.9%.

By sector, government external debt increased by 29.9 billion dollars, the central bank by 19.7 billion dollars, the banking sector by 19.1 billion dollars, and other sectors such as non-bank and private companies by 21.9 billion dollars.

External claims were recorded at 1.0779 trillion dollars, an increase of 50.2 billion dollars compared to the end of 2020. Net external claims, which is external claims minus external debt, decreased by 33.4 billion dollars from a year earlier to 449.4 billion dollars.

A Ministry of Economy and Finance official said, "Uncertainties in the international financial market continue due to the escalation of tensions in Ukraine and the possibility of accelerated U.S. monetary tightening," adding, "We will closely monitor capital inflows and outflows and external debt trends to manage external soundness."

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