South Korea’s short-term foreign debts hit four-year lowFebruary 21st, 2012 - 3:53 pm ICT by IANS
Seoul, Feb 21 (IANS) South Korea’s short-term foreign debts hit a nearly four-year low last year as local lenders paid back external debts with long-term funds borrowed from overseas, the central bank said Tuesday.
Short-term foreign debts that mature in one year or less reached $136.1 billion as of the end of December, down $3.6 billion from a year earlier, according to the Bank of Korea (BOK). The figure was the lowest since $130.2 billion tallied in the first quarter of 2007.
Foreign debts in the front end reduced last year as depository institutions repaid short-term debts, but long-term borrowing grew as domestic banks increased their overseas funding in the rear end as part of efforts to enhance their financial healthiness, reported Xinhua.
Long-term external liabilities with a maturity of more than one year expanded $42.6 billion on-year to $262.2 billion in 2011, sending the country’s total foreign debts to $398.4 billion last year, up $39 billion from the previous year.
“Combined foreign debts grew by $39 billion last year, but it was mainly attributed to a rise in demand for foreign funds caused by expansion in South Korea’s economic scale and external trade volume,” the Ministry of Strategy and Finance said in a statement.
Relative to economic scale and foreign reserves, the nation’s short-term foreign debts decreased noticeably.
The ratio of short-term foreign debts against foreign reserves came in at 44.4 percent as of the end of December, down 3.5 percentage points from the previous year. The rate for foreign debts to GDP stood at 35.9 percent last year, lower than 41.4 percent tallied in the 2009 when the financial market was roiled by the global crisis.
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