The nation’s net foreign credit increased 3.5 percent to $47.6 billion in October, boosted by growing foreign-exchange reserves.

The Ministry of Finance and Economy said yesterday that South Korea’s total foreign credit (the money owed to the country by foreign debtors) rose 1.3 percent in October to $177.3 billion, compared with $175.8 billion in September.

Meanwhile, the country’s total foreign debt fell by $100 million to $129.7 billion, compared with $129.8 billion a month before.

This pushed up net foreign credit to an all-time high of $47.6 billion, up from $46 billion in September and $45.2 billion at the end of last year.

"The net foreign credit has continued to rise since 1999, when the country began to show a strong recovery from the 1997-98 Asian crisis," the ministry’s foreign exchange regulations and external debt division director Kim Ik-joo said.

He attributed the rise in the net foreign credit to the replenishing of foreign-currency reserves, which strengthened the nation’s external payment position over the last three years. He dismissed worries that the nation might be battered by another foreign-currency liquidity crisis due to recent increases in its short-term external obligations.

South Korea has emerged as the world’s fourth largest holder of foreign reserves with $117 billion in October, up from $116.7 billion a month earlier.

The reserves have continued to rise from $8.9 billion at the end of 1997 to $49.5 billion in 1998, $74 billion in 1999, $96.2 billion in 2000 and $102.8 billion in 2001.

According to the ministry, the country reported a net foreign debt of $54.1 billion in 1997 and $20.2 billion in 1998, hit hard by the financial turmoil. But, South Korea began to emerge a net creditor nation in 1999, when it posted $33.1 billion in net foreign credit.

The sum increased to $33.1 billion in 2000. The public sector registered $117.7 billion in foreign credit in October against $19.3 billion in foreign debt, while local financial institutions had $36.7 billion in external credit against $34.6 billion in external obligations.

Foreign banks operating here in Korea reported $5.1 billion in external credit over a foreign debt of $17.6 billion, suffering from a net external debt of $12.5 billion.

Local corporations’ external obligations were estimated at $58.2 billion against their foreign credit of $17.8 billion, resulting in $40.4 billion in net foreign debt.

The nation’s total external obligations are made up of $52.5 billion in short-term debt with a maturity of less than one year, and $77.2 billion in long-term debt.

The total foreign debt was equivalent to 28.5 percent of the country’s gross domestic product (GDP) in October, slightly down from 28.8 percent a month ago.

A country reporting less than a 30-percent debt ratio over its GDP is consider to have no problem with its foreign obligations, according to World Bank standards.

The country’s short-term foreign liabilities were equivalent to 44.9 percent of its foreign currency reserves, down from 45.3 percent in September.

A country with foreign liabilities of less than 60-percent of its reserves is thought to have enough to deal with its short-term obligations.