South Korea is unlikely to get back 3 trillion won (US$2.5 billion) in outstanding loans and interest payments it provided North Korea in the past with the freezing up of relations following Pyongyang's recent nuke test and long-range missile launch, observers said Saturday.
According to data provided by the finance ministry and Export-Import Bank of Korea (Korea Eximbank), the country provided 2.5 trillion won worth of direct funds and indirect assistance to its northern neighbor over the years comprising of food shipments; money used to build up roads and railways linking the two Koreas; and funding for the now defunct Korean Peninsula Energy Development Organization (KEDO). KEDO aimed to build light-water reactors in the North in exchange for the isolationist country giving up its clandestine nuclear development program.
Authorities said that while the principal stood at 2.5 trillion won, the total Seoul should receive rises to 3 trillion won if interest payments are counted.
Almost all funds given to the North were handled by Korea Eximbank, which sent money to Pyongyang's Foreign Trade Bank.
The government said while the North did send some 1,000 tons of iron ore in early 2008 as payment for the loans it got, it has since not responded to calls to pay up,
"It has been in arrears ever since," an official said. "The North has been silent on calls to pay back its loans and interest."
The country should have started paying back the first food-related loan in June 2012.
Source: Yonhap news