Gangwon Province might end up with huge debts after the 2018 PyeongChang Winter Olympic Games.
The Gangwon Regional Headquarters of the Korean Government Employees’ Union started to request 100 percent government funding for the PyeongChang Winter Olympics on Oct. 7, worrying over the decision to issue 100 billion won (US$93.7 million) worth of municipal bonds next year.
Gangwon Regional Headquarters said, “Gangwon Province already has 580 billion won [US$543 million] of debt. After issuing 100 billion won of municipal bonds, Gangwon Province might go bankrupt. At least 300 billion won is required for Gangwon Province to bear for further preparations, including construction of stadiums.”
They also insisted, “As the PyeongChang Winter Olympics are national events, the government shall be entirely responsible for financing. If the government does not accept this request, Gangwon Province should seriously consider returning the right to host the Olympics.”
They pointed out, “After hosting the 17th Asian Games Incheon 2014, Incheon City needs to pay back 1.2523 trillion won [US$1.1745 billion] of principal only, and in total 1.7502 trillion won [US$1.6414 billion] including interest.”
In this situation, Gangwon Province still believes that issuing municipal bonds is inevitable. An associate at the Budget Planning Office of Gangwon Province said, “Without proactive financial support from the central government, there is no other option but to issue municipal bonds to raise an additional 300 billion won. Whether the amount is 300 billion won or more cannot be determined at present.”
The problem is that Gangwon Province will have to bear great costs starting from 2021 when the municipal bonds expire. Gangwon Province might follow in the footsteps of Alpensia Resort, which currently owes large amounts after preparations to host the Olympics. If removal costs are incurred after the Olympics in February 2018 are included, the debt burdens of Gangwon Province will snowball.
The net debts of Gangwon Provice are currently 580 billion won (US$543.9 million) as of the end of this year. The rate of financial independence is 18.7 precent, substantially lower than the national average of 51.1 percent.
Gangwon Province asked delegate Kim Moo-sung of the Saenuri Party, who visited PyeongChang Alpensia to check up on the preparedness of the Olympics, to include the entire budget for the Olympics including the construction of stadiums and roads in government expenditures next year.
An associate at the PyeongChang Organizing Committee for the 2018 Olympic and Paralympic Winter Games expressed frustration by saying, “Delegate Kim answered that he will figure out ways to receive financial support from the central government. According to the Special Act on Support for the 2018 PyeongChang Olympic and Paralympic Winter Games, the government is allowed to provide ‘more than 75 percent’ of the total budget. However, the government is trying to give exactly 75 percent.”