Debt to top 500 trillion won in 2014

Total national debt is expected to surpass 500 trillion won ($465 billion) next year, increasing per capita debt to 10 million won, according to a government report yesterday.

The Ministry of Strategy and Finance said the country’s total debt is estimated to hit 515.2 trillion won in 2014, 8.5 times higher than the 60.3 trillion won debt in 1997.

National debt surged after the government expanded its expenditure during the Asian financial crisis, the ministry report noted, and has grown at triple the rate of GDP.

The debt-to-GDP ratio is expected to reach 36.5 percent next year, up from 11.9 percent in 1997.

The nominal GDP is estimated to be 1,410 trillion won in 2014, about 2.8 times larger than it was in 1997.

Despite apparent surges in national debt, the government reiterates that the country’s debt level is not as high as that of other major economies.

The average debt-to-GDP ratio of OECD member countries was 108.8 percent last year, the ministry said. The ratio in the United States was 106.3 percent, while in Japan it was 219 percent.

“The Korean government is managing its debt level compared to other countries,” said a high-ranking official at the Ministry of Finance.

The government’s goal is to lower the debt ratio to 35 percent by 2017 by keeping further limiting growth in expenditure to a level lower than revenue growth, the ministry said.

Debt at public corporations is also burdensome, the ministry said, and the government plans to slash their debt significantly in the next four years.

The total debt of 41 public corporations is expected to be 520 trillion won by the end of the year.

“Public corporations should make efforts first to cut debt before they want government support,” said Lee Suk-joon, vice finance minister at a meeting to discuss measures for managing national debt yesterday.

“While maximizing the total spending, the government will try not to threaten fiscal soundness,” said Lee.

BY SONG SU-HYUN [ssh@joongang.co.kr]