Snowballing national debtSouth Korea’s national liabilities topped 1,400 trillion won ($1.2 trillion). According to the national account settlements of fiscal 2016 from the Ministry of Strategy and Finance, the nation’s broad liabilities reached 1,433 trillion won when including the total debt of central and provisional governments and the dues for the government to cover pension payouts for civil servants and career soldiers.
The central and local governments’ debt totaled 627 trillion won last year, jumping from 400 trillion won in 2011. The growth pace over the last five years is fastest among the Group of 20 economies. Public debt has grown to be tantamount to 38.3 percent of the nation’s gross domestic product because the government has created a supplementary budget every year to stimulate the economy and bolster social welfare.
The debt against the GDP still hovers below the average of the Organization for Economic Cooperation and Development, but nevertheless is worrisome given the pace of growth.
What also poses as a danger to our fiscal integrity is the deficit-ridden government employees and military pensions. About 752 trillion won in tax funds would be needed to make up for the imbalance in payments and revenue in the pensions. That amount exceeds the total government debt, and the two public pensions account for about two thirds of last year’s increase in national liabilities.
The colossal cost suggests how imperative it is to reform the two pensions structured to pay out generously on small contributions. The future calls for much more spending. Welfare demand will increase due to low births and a surging aging population.
Presidential candidates nevertheless are making populist promises to increase public jobs. The legislative should consider making laws for tougher scrutiny on budgetary spending and a cap on increases in government employees.
JoongAng Ilbo, April 5, Page 30