Combined 4.7 trillion won debt is 4.8% hike
According to data from the Ministry of Strategy and Finance and the National Assembly Budget Committee and compiled by Rep. Shim Jae-chul, which JoongAng Ilbo exclusively obtained, nearly half of the debts were from private corporations, about 2,232 trillion won.
This was followed by debts in central and local governments, including state-run organizations, which amounted to 1,124 trillion won, and household debt at 1,087 trillion won. People running their own small businesses had 236 trillion won of debt in total.
The total debt has increased 229 trillion won, or 4.8 percent, from a year earlier, data showed. In particular, the public-sector debt, which refers to the total amount of debt in central and local governments, all state-run organizations and companies nationwide, posted a 47 trillion won, or 4.2 percent, increase from 2013. This also included the informal debts at several state-run financial institutions, such as Korea Credit Guarantee Fund, which the Finance Ministry does not count in official records.
Government debt rose the most from 2013, an increase of 9.9 percent, among all categories. Household debt grew 6.1 percent and corporate loans went up 5.2 percent. Other debts’ growth all fell a bit, by 0.1 percent at state-run organizations and by 1.5 percent at small-size enterprises.
The data came after next year’s budget plan showed Korea would have more than 40 percent in government debt-to-GDP ratio in 2016 due to worsening fiscal deficits. The total amount of the central government’s debt is expected to expand by 50 trillion won in 2016 to 645 trillion won, according to Finance Ministry.
Household debt has surpassed 1,100 trillion won as a result of the central bank lowering borrowing costs for the fourth time since last year to boost the economy, setting it to the historic-low level of 1.5 percent. The growing household debt is particularly worrisome for policymakers as its growth in the second quarter was the highest ever, more than 30 trillion won on a quarterly basis.
“While the economic growth in China is slowing, Korea could face a crisis anytime because both public and private sectors have tremendous amounts of debt,” Shim said. “The government needs to devise comprehensive measures to manage overall debt.”
BY KIM MIN-SANG AND KIM HEE-JIN [firstname.lastname@example.org]
with the Korea JoongAng Daily
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