As the Russia-Ukraine war continues, delays in Russia’s repayment of economic cooperation loans to South Korea have surfaced.
According to the data reviewed by South Korea’s Democratic Party lawmaker Ahn Do Geol) from the National Assembly’s Planning and Finance Committee, South Korea is experiencing delays in recovering approximately 280 billion KRW ($203 million) that Russia owes in economic cooperation. The Ministry of Economy and Finance and the Korea Export-Import Bank submitted the data.
The origins of these loans date back to 1991, when, under President Roh Tae Woo’s administration, South Korea provided $1.47 billion in loans to Russia as part of its Northern Policy’s “Bear Project.” However, repayment of this debt has faced repeated delays over the years.
In 2003, the South Korean and Russian governments reached a debt restructuring agreement in which Russia committed to repaying $1.58 billion. Despite this arrangement, the outstanding amount of approximately 280 billion KRW has been overdue since June of this year.
Russia had pledged to repay the remaining debt by December 2024, agreeing to make biannual payments of $35 million on June 1 and December 1, with interest calculated at LIBOR plus 0.5%. However, due to the invasion of Ukraine and the resulting international sanctions, Russia is now finding it difficult to transfer funds in U.S. dollars, which has led to further delays. Consequently, principal and interest payments totaling about 160 billion KRW ($120 million), due last year and earlier this year, remain unpaid.
Ahn expressed concern, stating, “Given the prolonged Russia-Ukraine war and the likelihood of intensified international sanctions, resolving the repayment issue will not be easy.” The South Korean government is urging repayment through diplomatic letters and practical discussions with the Russian side and plans to continue negotiations via diplomatic channels.
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