Both long- and short-term debt increase to 766.9 billion dollars
"External debt soundness indicators somewhat deteriorate"
As demand for Korean bonds from overseas has increased ahead of the inclusion of Korean government bonds in the World Government Bond Index (WGBI), external debt as of the end of last year expanded by more than 94.0 billion dollars in the space of a year. The share of short-term external debt rose sharply, leading to some deterioration in external debt soundness indicators.
According to the "Trends in External Assets and Liabilities at the End of 2025" released by the Ministry of Economy and Finance on the 25th, external debt stood at 766.9 billion dollars at the end of December last year, an increase of 94.0 billion dollars from 672.9 billion dollars at the end of the previous year.
Short-term external debt with a maturity of one year or less was 179.0 billion dollars, up 32.5 billion dollars from the end of the previous year, while long-term external debt with a maturity of more than one year was 587.8 billion dollars, up 61.5 billion dollars from the end of the previous year.
More specifically, external debt increased by 46.0 billion dollars in the government sector and 30.1 billion dollars in other sectors, and also rose by 2.4 billion dollars in the central bank and 15.5 billion dollars in banks.
The government explained last year’s increase in external debt by saying, "It reflects the inflow of overseas investment funds into the domestic market, such as increased foreign investment in Korean bonds ahead of the inclusion of our government bonds in the WGBI in April."
External assets amounted to 1.1368 trillion dollars, an increase of 76.8 billion dollars from 1.06 trillion dollars at the end of the previous year. Net external assets, calculated by subtracting external debt from external assets, were 369.9 billion dollars, down 17.2 billion dollars from 387.1 billion dollars at the end of the previous year.
The ratio of short-term external debt to total external debt was 23.3%, up 1.5 percentage points from 21.8% at the end of the previous year. The ratio of short-term external debt to foreign exchange reserves was 41.8%, an increase of 6.5 percentage points from 35.3% at the end of the previous year. On a quarter-end basis, the ratio of short-term external debt to reserves was the highest since the end of the first quarter of 2022 (42.3%). The Ministry of Economy and Finance stated that although external debt soundness indicators have edged up, they remain at a stable level.
The foreign currency liquidity coverage ratio (LCR), which indicates domestic banks’ capacity to repay external debt, was 178.4% at the end of last year, far exceeding the regulatory ratio of 80%.
An official from the Ministry of Economy and Finance said, "In a situation where global trade conditions and monetary policy are changing and geopolitical risks persist, we will make every effort to maintain external soundness, while at the same time steadily implementing policies to revitalize the foreign exchange and capital markets so that the flow of foreign investment into the domestic market can continue."
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