Total debt nears 5,000 trillion won before Covid-19 impact

Korea's total debt has reached an all-time record of nearly 5,000 trillion won ($4,286 billion) under the current Moon Jae-in administration.

This figure, which includes government, personal and corporate debt, could further surge as many are heavily relying on loans to weather the impact of Covid-19.

According to data from the Finance Ministry and the Bank of Korea provided by People Power Party lawmaker Choo Kyoung-ho's office, total debt as of the end of 2019 amounted to 4,916.4 trillion won.

In just three years since the total debt exceeded 4,000 trillion won in 2016, 823 trillion won of debt has been added.

Total debt was more than 2.5 times the size of the nation’s GDP last year, which was 1,919 trillion won.

The largest debt came from the government, amounting to 2,198.1 trillion won. The figure also includes debt owed not only by the central and local government but also debt owed by state-owned institutions and companies as well as public servant and military officials pensions.

Individual debts including credit card purchases as of last year amounted to 1,600.3 trillion won while borrowing from companies amounted to 1,118 trillion won.

Both debts owed by individuals and companies are at an all-time high.

Opposition party lawmaker Choo said the record-size debt is the result of the government’s reckless spending, low interest rates and the sluggish economy.

The bigger concern is the significant expansion of these debts this year on all fronts, largely due to Covid-19.

This year the national debt is expected to add 846.9 trillion won, in part due to the four supplementary budgets that have been approved.

Debt accumulated by individuals and companies has also shot up as the global pandemic creates unprecedented economic hardships.

In the first half of this year, household borrowing amounted to 1,637.3 trillion won. In just six months, 37 trillion won worth of fresh loans have been borrowed, a 2 percent increase.

Considering the surge of Covid-19 cases in August that led to many businesses and households being impacted by social distancing, that debt by the end of this year will likely see a sharp rise.

Companies in the first half of this year borrowed 1,233.8 trillion won of loans. That’s a 10 percent increase compared to the whole of 2019 at 1,118 trillion won.

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