Korea Returns to Net Creditor Status in 15 Months

Korea has returned to net creditor status for the first time in 15 months thanks to a continuous trade surplus.

The Bank of Korea yesterday said the country’s net foreign credit, or foreign credit minus foreign debt, reached 2.98 billion U.S. dollars in September, up 9.41 billion dollars from June.

The country had net foreign credit in June last year with 1.4 billion dollars. After peaking at 120.84 billion dollars in late 2006, net foreign credit kept falling. In September last year, Korea became a net debtor, and in the wake of the global financial crisis, net foreign debt snowballed to as high as 30.07 billion dollars late last year.

The central bank said Korea’s current account surplus has contributed to a surge in foreign exchange reserves, which in turn raised net foreign credit. In September, the country’s foreign credit was 400.49 billion dollars, up 28.33 billion dollars from late June.

Total debt grew 18.92 billion dollars from June to 397.5 billion dollars in September.

Though short-term debt with maturity of under a year decreased 1.14 billion dollars, long-term borrowings jumped 20.06 billion dollars. The share of short-term debt in Korea’s overseas borrowings was 36.8 percent in September, down from 38.9 percent in June.

jaeyuna@donga.com