Q2 External Debt Reaches $810 Billion... Short-Term Debt Ratio Exceeds 46%

External Debt Surges Over $800 Billion in Q2

Short-Term Debt Rises, Debt Soundness Indicators Slightly Weaken

Net External Claims Continue to Climb as Foreign Exchange Reserves Also Increase

South Korea's external debt surged by 38 billion dollars in just three months, surpassing 800 billion dollars. While the increase in long-term external debt was significant, short-term external debt also grew, leading to a slight deterioration in external debt soundness indicators.

According to the “Trends in External Claims and Debt at the End of Q2 2026,” released by the Ministry of Economy and Finance on August 20, external debt at the end of the second quarter stood at 812.8 billion dollars, an increase of 38.4 billion dollars compared to the previous quarter's 774.4 billion dollars.

By maturity, short-term external debt of one year or less stood at 198.5 billion dollars, rising by 15 billion dollars from the previous quarter. Long-term external debt exceeding one year recorded 614.3 billion dollars, increasing by 23.5 billion dollars.

Regarding the increase in short-term external debt, the Ministry of Economy and Finance explained that it was mainly due to a rise in standby and transitional debt resulting from foreign investors selling domestic stocks, rather than a fundamental expansion of borrowing.

By issuer, external debt increased by 8.4 billion dollars for the government and by 36.3 billion dollars for the other sectors (non-banking, public, and private companies). In contrast, the central bank and banks saw external debt decrease by 1.5 billion dollars and 4.8 billion dollars, respectively.

At the end of the second quarter, external claims reached 1.1806 trillion dollars, an increase of 40.7 billion dollars from the previous quarter (1.1399 trillion dollars). Net external claims, which represent the difference between external claims and external debt, stood at 367.8 billion dollars, rising by 2.3 billion dollars from the previous quarter (365.5 billion dollars). With the increase in external claims slightly outpacing the increase in external debt, net external claims turned to an upward trend for the first time in three quarters.

The proportion of short-term external debt relative to total external debt was 24.4%, up 0.7 percentage points from 23.7% at the end of the first quarter. The ratio of short-term external debt to foreign exchange reserves rose to 46.5% from 43.3% at the end of the first quarter.

Regarding the deterioration in external debt soundness indicators, the Ministry of Economy and Finance noted, "Although the increase in long-term external debt was greater, the rise in short-term external debt also pushed up relevant shares and ratios. Nevertheless, net external claims and foreign exchange reserves both posted a modest increase, suggesting that the country’s external payment capacity remains at a stable level."

The foreign currency liquidity coverage ratio (LCR), which indicates domestic banks’ capacity to repay external debt, was 167% at the end of the second quarter, far exceeding the regulatory requirement of 80%.

This content was produced with the assistance of AI translation services.