Government liabilities break 2,000 trillion won for first time

Economy

Published: 05 Apr. 2022, 17:27 Updated: 05 Apr. 2022, 20:04

Government liabilities break 2,000 trillion won for first time

Government officials including those from the Finance Ministry brief on 2021 financial statement including income and spending at Sejong on April 4. [YONHAP]

Government liabilities last year exceeded 2,000 trillion won ($1.65 trillion) for the first time as spending surged to fight the pandemic.

Increases in public service provisions due to increased hiring also stressed the budget.

Korea's 2021 financial statement showed national liabilities increasing 10.8 percent to 2,196.4 trillion won, according to information released during a cabinet meeting.

The liabilities include government bonds and contingent liabilities, such as provisions for public servant pensions.

Pension provisions are not current obligations but forecasts of what is owed going decades out as government employees retire.

Current debt including government bonds in 2021 totaled 818.2 trillion won, up 14 percent.

The government cited the two supplementary budgets as adding to the liabilities. Debt created through the supplementary budgets totaled nearly 50 trillion won.

Total debt including pension payments and local government bonds totaled 967.2 trillion won, up 14 percent.

Unconfirmed liabilities last year amounted to 1,378 trillion won, up 9 percent. Among those liabilities, public pension liabilities totaled 1,138.2 trillion won.

The Moon Jae-in government spent heavily on a number of projects, including those related to income-led growth and hiring at state-run agencies. Covid-19 also contributed.

Total liabilities were 1,433.1 trillion won at the end of 2016, and at the end of 2019, they were 1,743.7 trillion won.

Last year, the debt-to-GDP ratio was 47 percent, up 3.2 percentage points from 2020. It is up 11 percentage points since 2016.

With the first supplementary budget for this year, government debt is expected to break 1,000 trillion won and the debt-to-GDP ratio 50 percent.

Last year, the government reported a 30.4 trillion-won deficit. In 2020, the deficit was 71.2 trillion won.

"We were able to significantly improve the deficit," said Kang Wan-koo, head of the Fiscal Management Bureau at the Finance Ministry.

In 2021, government income — mainly taxes — was 570.5 trillion won, up 19.2 percent. The government collected 344.1 trillion won in taxes alone, up 20.5 percent.

Total spending hit 600.9 trillion won, up 9.3 percent.

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