South Korea's Export-Import Bank, which is known as Eximbank, said it notified Pyongyang that the first repayment date was in May, just in case it had forgotten, but there was no response initially. Thinking the check might have got caught up in the mail, the bank has been going down to Seoul Central Post Office every day for a month but by the end of last week it still hadn't arrived.
This passing of the May deadline put the North in arrears, but on Sunday the late-payment period lapsed putting the North formally in default on the loan, although South Korean authorities have yet to declare this for fear of the consequences. North Korea is believed to be unable to repay the money because under harsher policies towards it enacted by President Lee Myung-bak, the South has stopped exporting the ink which Pyongyang needs for its so-called 'superdollar' counterfeit printing presses.
As the final deadline passed, Eximbank instead sent a letter to Pyongyang reminding it that by failing to pay, it risked damaging its credit rating and international reputation, which would make it difficult to obtain future loans from countries other than South Korea.
Pyongyang has since replied that it is currently lacking hard currency as it has all its money tied up in the markets, but it has suggested that the loan could instead be made into a barter agreement. The North is known to be rich in minerals, unlike South Korea where they have to be purchased in small bottles at great cost, and in 2007 it repaid $2.4 million of debt with zinc ore. It is reported that this time Pyongyang has offered to send uranium to Seoul as an alternative.
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