'Crisis Debts' Are All Repaid, Finance Ministry Announces

The government said Monday that the $22.11 billion worth of short-term foreign debts it backed in 1998 for domestic financial institutions are all paid off. A recent debt repayment of $260 million by local merchant banks, including Korean French Banking, was the last portion, the Ministry of Finance and Economy said.

When the foreign currency crisis hit in 1997, domestic financial firms were constantly pressured by foreign creditors to repay their short-term debts. But after the government provided payment guarantees the following year, the domestic firms were able to extend the maturities of the short-term loans to up to three years.

Analysts credit Korea's export machine for getting the firms back on sound financial footing. "Financial institutions were able to pay back their foreign debts largely because their foreign currency reserves have been given a boost since 1999 by the increase in exports," a Korea Exchange Bank official said.

A ministry official said that financial institutions can now get foreign currency loans on their own good credit, without government guarantees, and that the government has been relieved of the burden of possibly making good on the assurances.

by Lee Sang-ryeul