The Rate of Short-Term Foreign Debt Increases Continuously

The level of short-term debt rate of aggregate foreign debt become over the level of the end of 1997 first.

The government began to control short-term Yen loan as it reaches risky level. At 8th, according to Ministry of Finance and Economy (MFE), aggregate foreign debt at the end of September increased to 129.8 billion dollars by 600 million dollars compared to the end of August, and short-term debt, matured less than one year, among it was 40.8%, 52.9 billion dollars in monetary term. The rate of short-term debt for the aggregate debt of September increased by 0.9% compared to the end of 1997.

Additionally, the rate short-term foreign debt for foreign currency, index showing the payment ability, increased three consecutive months from 43.9% in July to 45.3% in September.

MFE explained that if the rate OF short-term foreign debt for foreign currency for is less than 60%, it is assessed as ‘safety level’ and added that it was not risky level.

At the end of September, aggregate foreign credit was 175.8 billion dollars and bigger than aggregate foreign debt by 46 billion dollars. So Korea maintains net credit nation position.

However, MFE is anxious that because of low interest rate and the stabilization of foreign currency in Japan, Yen loan increased rapidly.

Short-term Yen loan to companies by domestic banks was 50 million dollars at the end of 2001, but the amount has increased twice at the end of September in this year.

Kim Ik-ju, the Senior officer for Foreign Currency System of MFE spoke “When Yen is evaluated, the business that has not the ability to manage currency risk may be damaged seriously.” And added “Firstly MFE will lead for banks to restrain Yen loan, but it is not effective, MFE will restrain the purpose for foreign currency loan.”

Kwang-Am Cheon iam@donga.com