The South Korean government notified North Korea on Friday that it is time to start paying back a low-interest loan to cover food aid shipped from 2000 through 2007.

The first payment, a combination of principal and interest worth $5.83 million needs to be paid back by early next month, the state-run Export Import Bank said.

The loan, worth $720 million, covers 2.6 million tons of rice and corn sent in six tranches as part of a deal forged under the "sunshine" policy of previous South Korean administrations. The loan was given at an interest rate of one percent, and the North promised to redeem it over 20 years following a 10-year grace period, The Wall Street Journal's Korea Real Time blog reported.

It is a reasonable bet a country that uses all of its scarce hard currency for spending on the military and the ruling elite will not be rushing to meet its repayment obligations, particularly given its obvious hatred of the current South Korean regime.

The North's state media ratcheted up its hate-fueled rants against the Lee Myung-bak administration in the South in recent weeks for perceived disrespect of the ruling Kim dynasty.

But should Pyongyang decide to make good on its debts, it has options. An official with the South's Unification Ministry said that while the North is being asked to pay in cash, payment could potentially be made in commodities if an agreement can be reached.

Earlier this week, a pro-Pyongyang newspaper in Japan reported that North Korea has bountiful deposits of coal, magnesite and uranium.

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