Public sector accounts see surplus two years in a row

The public sector’s financial accounts recorded a surplus for a second straight year in 2015, suggesting reforms of nonfinancial public companies are working.

According to the Bank of Korea on Thursday, the public sector’s financial accounts reported a surplus of 33.8 trillion won ($30.4 billion) last year. This is nearly twice the size of the 17.4 trillion won surplus that the government and nonfinancial public companies enjoyed in 2014.

Last year, the government spent 701.8 trillion won, while total income including taxes and investment profits amounted to 735.6 trillion won. Total spending grew 7.8 trillion won, or 1.1 percent, compared to the previous year, but income grew at a faster rate of 3.4 percent, by 24.2 trillion won.

The government suffered deficits between 2008 and 2013 after the global financial crisis and did not see a surplus until 2014, largely thanks to reforms in the public sector. One of the Park Geun-hye administration’s key strategies was to improve the public sector by cutting back on businesses that were making losses.

Thursday’s report showed public sector accounts, which include the central government, regional governments and social welfare funds such as the pension fund, enjoyed a 22 trillion won surplus, a 16.4 percent increase from 2014’s 18.9 trillion won surplus.

Government income grew 6.6 percent to 526.6 trillion won, while spending reported a similar growth of 6.2 percent to 504.6 trillion won.

When breaking down the figures, the central government’s account reported a deficit amounting to 25.2 percent. But this was tempered largely thanks to contributions made by regional governments and social welfare funds including the pension fund, public servant’s pension fund and national health insurance fund.

Although regional governments saw their surplus last year shrink from 5.7 trillion won in 2014 to 4.5 trillion won largely due to increased welfare spending, the taxes they collected from the revitalized real estate market helped it continue to post a surplus.

Social welfare funds maintained a surplus similar to the previous year, at 42.7 trillion won.

But the biggest contributor was nonfinancial public companies. The report said last year that the 174 public companies reported a combined surplus of 9.5 trillion won, the first time that the companies have turned around from a deficit since the central bank began compiling the data in 2007.

“The Korea Electric Power Corporation’s sale of its headquarters in Samseong-dong, southern Seoul, to Hyundai Motor for 10 trillion won contributed largely to the turnaround,” a Bank of Korea official said.

BY LEE HO-JEONG [lee.hojeong@joongang.co.kr]