S. Korea's foreign debt rises

S. Korea's foreign debt rises

SEOUL (AFP): South Korea's net foreign debt soared to an eight-year high of US$18 billion at the end of 1995, due mainly to a snowballing current account deficit, the Ministry of Finance and Economy (MFE) said yesterday.

The country's total foreign debt swelled by $21.2 billion during 1995 to $78 billion, while its overseas assets grew to $60 billion, up $13.5 billion from a year ago, the ministry's tentative tallies showed.

Accordingly, the net foreign liabilities, which excludes the nation's overseas assets from the total debt, in 1995 stood at $7.7 billion, bringing total net foreign debt to an all-time high since 1987, when South Korea owed foreign countries $22.4 billion.

MFE officials said an aggravated current account deficit, coupled with a surge of overseas loans by corporations to finance facility expansion were blamed for the rise in debt last year.

South Korea saw its total foreign debt fall between 1985 to 1989, when the amount reached $29.37 billion, thanks to current- account surpluses during the period.

But since then the total foreign debt steadily worsened to $42.81 billion in 1992 and further to $43.87 billion in 1993.

South Korea's gross domestic product amounted to $379.5 billion in 1994, and is estimated to have grown around 9.3 percent last year.