The Ministry of Strategy and Finance and the Export-Import Bank of Korea have scrapped plans to press North Korea to repay a US$5.83 million loan that matures in June this year after opposition from the Unification Ministry.
The bank on Tuesday said the first deadline for repayment is June 7, and it had planned to ask North Korea in May to repay the first tranche of US$5.83 million. That is one-twentieth of the $88 million in food loans South Korea provided North Korea in 2000, plus 1 percent interest per year.
When the plan was reported in the press, the Unification Ministry immediately issued a statement denying it. The ministry said, "If North Korea is unable to honor the deadline (beginning in June), it must notify us first according to international practices. The government has not made any decisions to take specific steps before the end of the deadline."
It added the government hopes that the food loan problem between South and North Korea can be "resolved smoothly."
Following the ministry statement, the bank said, "We meant to follow international practice involving the North Korean food loan problem, but the Unification Ministry expressed its position in consideration of inter-Korean relations, so we decided to scrap the plan."
The Kim Dae-jung and Roh Moo-hyun administrations tapped into the Inter-Korean Cooperation Fund to provide North Korea with 2.4 million tons of rice and 200,000 tons of corn. The total cost of the food aid was $720 million, which the North was to repay within 20 years at an annual interest of 1 percent. The repayment has a 10-year grace period.