South Korea’s Foreign Debt Collection Woes: 1.6 Trillion Won Written Off

The Korea Trade Insurance Corporation has revealed that it has given up on collecting 1.6 trillion won in foreign receivables from 2019 to August this year. This staggering amount accounts for 29% of the total foreign bonds issued.

According to data obtained by Democratic Party of Korea member Heo Jong-sik, the total overseas debt incurred in 153 countries stands at 5.6 trillion won. The United States tops the list with 510 billion won in uncollected foreign debt, followed closely by Russia, Poland, China, Brazil, and Hong Kong.

The reasons behind the failure to collect these debts are varied. The debtor’s suspension of business and disappearance account for 19%, while the lack of practical benefit in taking legal action and collecting money through a collection agency account for 13% and 8%, respectively.

Rep. Heo emphasized that if the Korea Trade Insurance Corporation’s overseas debt recovery rate continues to decline, financial losses will mount, and trading companies will face significant challenges in securing funding. He stressed the need for preemptive and post-emptive measures to strengthen debt recovery efforts.

Key Statistics:

• Total overseas debt: 5.6 trillion won
• Uncollected foreign debt: 1.6 trillion won (29% of total)
• Countries with uncollected debt: 153
• Top countries with uncollected debt: United States, Russia, Poland, China, Brazil, and Hong Kong

By strengthening debt recovery efforts, the Korea Trade Insurance Corporation can mitigate financial losses and support trading companies in securing the funding they need to thrive in the global market.