Korea’s external debt amounted to US $664.5 billion as of the end of 2022, rising by US $32.1 billion from a year ago. Short-term debt was US $166.7 billion, up US $2.0 billion, and long-term debt was US $497.8 billion, up US $30.1 billion.
In 2022, while central bank borrowings (down US $15.7 billion) decreased as Monetary Stabilization Bonds (MSBs) turned to a net outflow, government borrowings (up US $9.9 billion) increased mainly because of continued net foreign investment in the Korean government bonds despite a decrease in the dollar equivalent value of Korean won amid a strong US dollar. Borrowings by banks (up US $23.8 billion) rose as they engaged in preemptive borrowings in the first half of 2022 to brace for US Fed interest rate hikes and other relevant events. Borrowings by other sectors (up US $14.0 billion) rose mainly driven by an increase in debt securities (up US $9.3 billion).
Both short- and long-term external debt increased compared to the previous year, but total external debt growth slowed and banks’ capacity to repay external debt remarkably improved.
The ratio of short-term external debt to total external debt fell to 25.1 percent, the lowest since 1998, mainly led by policy efforts such as encouraging state-owned enterprises to issue long-term foreign currency bonds.
The ratio of short-term debt to foreign exchange reserves is on an upward trend compared to the previous year following a decline in foreign exchange reserves caused by a reduction in the dollar equivalent value of foreign currencies other than the US dollar and measures to reduce volatility in the foreign exchange market.