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Public Debt Increases to 1.209 Quadrillion Won Despite Public Companies’ Decreased Debt
Increasing Public Debt
Public Debt Increases to 1.209 Quadrillion Won Despite Public Companies’ Decreased Debt
  • By Jung Suk-yee
  • March 26, 2015, 03:00
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As of the end of last year, the public debt amounted to 1.209 quadrillion won (US$1.098 trillion). Although the debt increase in public enterprises became daunted with the normalization plans of public organizations, general government debt with social security funds, including central and provincial governments and the national pension, increased 9.7 percent from a year ago, affecting the increase of public debt.

According to the money-flow tables from the Bank of Korea (BOK) on March 24, the debt of the government and non-financial public companies last year increased 76.3 trillion won (US$69.3 billion) to 1.2088 quadrillion won, up 6.7 percent from a year ago.

In particular, the general government debt at the end of last year was 795.6 trillion won (US$722.3 billion), sharply increasing by 70.6 trillion won (US$64.1 billion), or 9.7 percent, from the previous year. The increased debt amount doubled when compared to that in 2013, which is 38 trillion won (US$34.5 billion) with a 5.5 percent increase. However, the debt of public companies increased only 5.6 trillion won (US$5.1 billion), or 1.4 percent, to 413.2 trillion won (US$375.1 billion) as of the end of last year. Although the public enterprise debt led the increase in the public sector during the former Lee Myung-bak administration, the increase rate fell to 3.9 percent in 2013 from 6.4 percent in 2012, as the current government stepped in to lower the public enterprise debt.

The sharp increase of general government debt is related with issuing government bonds. The BOK reflects bond prices at the money market price in the money-flow tables, and the reflected additional bond amount reached about 20 trillion won (US$18.2 billion) as the government bond prices rose due to the dropped monetary market interest. 

However, in public sector debt statistics, which will be reported in the second half by the government, the government debt is expected to not show a high increase rate like last year. This is because the Ministry of Strategy and Finance reflects government bond prices by the par value instead of the market price for public sector debt statistics.