Korea posts lowest short-term foreign debt ratio since 1997

Korea¡¯s total and short-term foreign debt fell in November for the fourth consecutive month. The ratio of Korea¡¯s short-term debt against its foreign exchange holdings, an indicator of short-term external payment ability, was the lowest since the foreign exchange crisis at the end of 1997.

The Ministry of Finance and Economy announced Thursday that the nation¡¯s total foreign debt amounted to $136.6 billion at the end of November, a decrease of $1.8 billion from a month earlier. Its short-term foreign debt fell by $1.3 billion from the end of October to $44.8 billion at the end of November. As a result, the ratio of short-term debt to foreign exchange holdings was 48.0%, the lowest level since the foreign exchange crisis.

Noting that a ratio of short-term debt to foreign exchange holdings of less than 60% is regarded as a stable level, Lee Myung-Kyu, head of the foreign exchange regulations and external debt division of the Ministry of Finance and Economy, said that the possibility is very low that Korea will face another foreign exchange crisis.

Kwon Soon-Hwal shkwon@donga.com