Country's debt now larger than the GDP

Officials at the Ministry of Economy and Finance hold a briefing on last year's government fiscal balance at the government complex in Sejong on Monday. [YONHAP]

The Korean government owes more than the country's GDP, if the broadest possible measure of public debt is used.

According to the Ministry of Economy and Finance on Tuesday, national liabilities in 2020 hit 1,985 trillion won ($1,772.9 billion). This is a 13.8 percent on year increase.

In 2020, the gross domestic product was 1,924 trillion won.

To arrive at the liability, the ministry adds short and long-term treasury securities, pension liabilities, local debt and other non-current liabilities.

One of the biggest contributors to the increase was the issuance of government bonds to finance Covid-19 programs. The four supplementary budgets were financed mainly through debt.

Local and national government debt rose 17.1 percent to 846.9 trillion won. It went from 37.7 percent of GDP in 2019 to 44 percent in 2020. Pension liabilities hit 1,044.7 trillion.

That's not only 53 percent of the country's liabilities but also a 10.6 percent increase from 2019.

The problem is expected to continue to grow as the Moon Jae-in government promised to aggressively expand the number of public servants.

Last year the nation's deficit, the difference between income and spending, reached a new record of 71.2 trillion won.

It was the second consecutive deficit and a rise of 493 percent year-on-year.

Last year, income grew 5.7 percent to 478.8 trillion won, while spending grew 65 percent year-on-year to 549.9 trillion won.

When adding government spending on the national pension, teacher pensions, employment insurance and workers' compensation, the deficit came to 112 trillion won, an all-time record.

In 2020, tax revenue fell 2.7 percent to 285.5 trillion won as corporate taxes fell, though that was somewhat compensated for by strong capital gains tax revenues with the rise in stock and property prices.

The Finance Ministry said the debt isn't worrying as the International Monetary Fund calls for more spending and expansionary fiscal policies.

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