Closing the books: Korea to pay off last financial-crisis debt after 30 years

Korea is finally settling a 30-year-old tab. The government will repay the remaining 7.9 trillion won ($5.8 billion) in public-fund debt next year, drawing a line under one of the longest financial legacies of the 1997 Asian financial crisis.

“After 30 years, we are paying off the last debt from the financial crisis,” President Lee Jae Myung wrote on X on Thursday. “We have reached the finish line thanks to the people, who overcame one of the country’s most difficult moments and worked tirelessly for the past 30 years.”

The government’s 2027 budget proposal includes funding to repay the remaining 7.92 trillion won in debt tied to public funds deployed during the crisis.

Debt held by the Public Capital Redemption Fund stood at 15.7 trillion won at the end of last year. The government is set to repay 7.15 trillion won this year and clear the remainder next year.

The final payment will bring to an end a 25-year government repayment process that began in 2003. The Public Capital Redemption Fund is also scheduled to be formally dissolved at the end of 2027.

The debt is separate from Korea’s borrowings under the International Monetary Fund bailout program, which were fully repaid in 2001. The public funds were raised during the financial crisis to restructure troubled financial institutions and stabilize the country’s financial system.

When the government devised its repayment plan in 2002, it laid out plans to repay a total of 97.2 trillion won in debt. After excluding funds recovered through asset sales, 69 trillion won remained, of which 49 trillion won has been covered by government finances.

Once the final payment is made next year, Korea will put an end to the fiscal burden stemming from the financial crisis, three decades after it began.

BY KO SEUNG-PYO [[email protected]]