DPRK owes USD $1.5b to ROK

According to Yonhap:

North Korea owes about 1.8 trillion won (US$1.5 billion) to South Korea in food and other shipments, with its first repayment due next June, but chances of repayment are slim given the country’s crumbling economy, a government report said Monday.

The debt is for food, railway equipment and raw materials South Korea has provided to its impoverished communist neighbor in the form of loans over the past decade, according to the Unification Ministry report submitted for the annual parliamentary audit.

South Korea had been one of the largest aid providers to the North, but such shipments were halted after President Lee Myung-bak took office in early 2008 with a pledge to link aid to progress in efforts to end Pyongyang’s nuclear weapons programs.

Repayment of the loans was scheduled over 20 years with a 10-year grace period, at 1 percent annual interest. The North is scheduled to make its first repayment in June of next year for a $5.83 million food loan extended in 2000.

South Korean officials, however, have cast doubt on that repayment given the North’s dire economic situation.

The DPRK remains in debt default from loans taken in the 1960s and 1970s. The Russians are in talks to forgive DPRK debts (Likely in connection with developments of the Rason economic zone and/or natural gas pipeline).

You can learn more about speculating on the repayment of North Korean debt here.


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