South Korea marked a foreign debt decline in 2008, first time in seven years, as local banks repaid their short-term loans with the dollars provided by the government, the Bank of Korea (BOK) said on Friday.

South Korea's foreign debt fell to US$380.5 billion as of the end of 2008, US$2.66 billion lower than the previous year, the BOK said.

It was the first drop since 2001 when the country's foreign debt decreased by US$19.4 billion.

South Korea's foreign debt also declined by US$45 billion last quarter, the largest quarterly drop since the related data was compiled.

"South Korea's overseas debt made a drop last year as local banks could repay their debts in the fourth quarter with dollar liquidity provided by the authority," an official at the BOK said.

Meanwhile, South Korea's foreign exchange reserves stayed on a declining line for eight consecutive months last year, but made a jump in December when the government injected dollar liquidity to local banks to relieve the deepening credit squeeze.

The country's foreign reserves stood at US$201.74 billion as of the end of January.

Although the country marked a fall in foreign debts, the local currency kept slipping down against the US dollar for the ninth consecutive session on Friday.

(Xinhua News Agency February 20, 2009)