The outstanding household loan balance stood at 1,109.6 trillion won ($806.7 billion) as of the end of May, up 6 trillion won from a month earlier, according to the Bank of Korea.
The Bank of Korea attributed the 0.1 percent contraction to high interest rates, the sluggish housing market and strict loan issuance regulations after a record spike in the third quarter last year.
Issuing debts only spells the need for more tax collection.
The IMF predicts that Korea's general government gross debt will reach 60 percent of its GDP by 2029. Global public debt is projected to approach 100 percent of GDP by the end of the decade.
Korea's national debt last year hit a record high of 1,126.7 trillion won ($826.6 billion), accounting for more than 50 percent of the country's debt-to-gross domestic product.
Taeyoung Engineering & Construction's shares were suspended Wednesday due to its negative net asset balance amid debt restructuring.
But such makeshift measures aimed at helping self-owned businesses stay afloat cannot fundamentally solve their problem.
Homeplus addressed concerns about its liquidity problems, confirming that it has reached a rollover agreement with Meritz Securities.
The Korean government will not use public funds to finance the ailing Taeyoung Engineering and Construction. It urged the company to implement self-rescue plans and gain creditors' trust in order to resolve its liquidity crisis.
The government is considering deleting overdue debt records for small business owners and people in vulnerable classes that had piled up during the Covid-19 pandemic.
Korea JoongAng Daily Sitemap