Finance Ministry to reduce $24B of debt incurred by 14 public companies

Industry

Finance Ministry to reduce $24B of debt incurred by 14 public companies

Published: 02 Sep. 2024, 18:56

Pictured is Korea Electric Power Corporation (KEPCO) headquarters at Naju, South Jeolla. [YONHAP]

The Finance Ministry said Monday it will push to reduce 32.1 trillion won ($24.01 billion) of debt incurred by 14 financially troubled public companies combined by 2026 through asset sales and organization restructuring.

According to the revised financial management plan, the government set the target debt amount for Korea Electric Power Corporation (Kepco) and 13 other troubled state-run firms for 2022-2026 to be slashed to 57.3 trillion won from last year’s goal of 42.2 trillion won.

So far, they have reduced about 25.2 trillion won in debt combined through various restructuring measures, and such efforts will continue to improve the fiscal health of the public sector, according to the Finance Ministry.

In detail, the companies plan to sell noncore assets worth 9.1 trillion won, restructure their businesses to save 19.3 trillion won and beef up capital of 10.8 trillion won, among other steps.

The companies include Korea Railroad Corporation (Korail), the state power firm Kepco’s five power-generating affiliates, Korea National Oil, Korea Gas and state housing developer Korea Land & Housing.

According to a longer-term financial management plan, the government expected the total assets of 35 state-run companies to rise to 1,212.4 trillion won by 2028 from this year’s 1,040.6 trillion won.

Their debts are also forecast to grow from 701.9 trillion won in 2024 to 795.1 trillion won in 2028, though the debt ratio would fall to 190.5 percent in 2028 from this year’s 207.3 percent, the ministry said.

“The government will continue to implement measures to improve the financial health of public institutions to prevent the matter from negatively affecting the country’s overall economy,” the ministry said in a release.

Yonhap