State projects bumped up public sector debt in Q1

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State projects bumped up public sector debt in Q1

Public sector debt rose nearly 10 percent in the first quarter from a year earlier due to increased spending on state projects and government efforts to curb public utility charges, data showed yesterday.

The outstanding debt of the government and nonfinancial state-owned corporations came to 842.27 trillion won ($738.5 billion) as of the end of March, up 9.9 percent from a year earlier, according to the data by the Ministry of Strategy and Finance and the Bank of Korea.

The figure is 2.6 times the government’s total budget of 325.4 trillion won for this year.

Compared to the last quarter of 2011, the public-sector debt rose by around 40 trillion won.

The sharp increase was attributed to major outlays on large-scale state projects, including one to refurbish the country’s four major rivers.

The government’s move to rein in electricity rates and other public utility charges to keep a lid on inflation also played a role as it ate into state companies’ profits.

According to the data, the central government, provincial administrations, the state pension fund and other social welfare agencies had a combined debt of 455.34 trillion won as of the end of March, up 9.6 percent from a year earlier.

Over the cited period, nonfinancial state-run companies saw their liabilities increase 10.2 percent to 388.92 trillion won.

The growth rate of the public-sector debt was much higher than that of the private sector.

The debt of nonfinancial private companies had 1,543.59 trillion won in debt as of end-March, up 5.5 percent from a year earlier.


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