Last year, Korea's external debt hit an all-time high of $766.9 billion. Ahead of the inclusion of Government Bonds in the World Government Bond Index (WGBI), a surge of foreign funds flowed in, sharply boosting Government Bonds investment. Soundness indicators, including the share of short-term external debt, worsened slightly.
According to the "Trends in External Claims and Debt at the end of 2025" released by the Ministry of Finance and Economy on the 25th, external debt at the end of last year stood at $766.9 billion, up $94.0 billion from the end of 2024 ($672.9 billion).
By maturity, short-term external debt (maturity of one year or less) rose by $32.5 billion to $179.0 billion, and long-term external debt (more than one year) increased by $61.5 billion to $587.8 billion. By institutional sector, the government saw the largest increase of $46.0 billion, and the Central Bank ($2.4 billion), banks ($15.5 billion), and other institutional sectors ($30.1 billion) all expanded.
The government cited as a key factor the sharp rise in foreign investment in domestic bonds ahead of the inclusion of Government Bonds in the WGBI in April. In fact, foreigners' net investment in Government Bonds jumped from about $9.4 billion in 2024 to about $43.1 billion in 2025.
In contrast, external assets totaled $1.1368 trillion, up $76.8 billion from the end of 2024 ($1.06 trillion). As a result, net external assets—external assets minus external debt—fell by $17.2 billion to $369.9 billion.
Soundness indicators worsened slightly. The share of short-term external debt to total external debt rose 1.6 percentage points (p) from 21.8% to 23.3%, and the ratio of short-term external debt to foreign exchange reserves also climbed 6.6 p from 35.3% to 41.8%.
The foreign currency liquidity coverage ratio (LCR), which reflects domestic banks' capacity to repay external liabilities, was 178.4% at the end of 2025, far exceeding the regulatory ratio (80%).
A Ministry of Finance and Economy official said, "Given the ongoing external uncertainties, including the global trade environment, changes in major countries' currency policy, and geopolitical risks, we will do our best to manage external soundness," adding, "We plan to continue pushing policies to advance the foreign exchange and capital markets so that foreign investment flows can continue."