Published : 2014-02-25 16:05
Updated : 2014-02-25 16:08
South Korea's national debt, including that of public companies, reached 1,218 trillion won ($1,135 billion) in 2012, or roughly 95 percent of the country's GDP, the country's largest federation of business groups said Tuesday.
The findings released by Korea Economic Research Institute, the research arm of the Federation of Korean Industries, showed that the total debt size is 2.7 times larger than the government debt that stood at 443.1 trillion won for the one-year period.
The figures also showed government debt alone jumping four-fold in percentage terms compared to 1997, when the country was hit by the Asian financial crisis and had to receive bailout assistance from the International Monetary Fund.
The FKI included public sector debt in its count, on grounds that the government must take responsibility for it. The government, on the other hand, does not view obligations accrued by public companies as national debt.
The FKI's calculations include debt owned by financial corporations and debt that comes under the supervision of regional administrations.
"If only government debt is counted, (the national debt) reached 34.8 percent of the country's nominal GDP," the FKI said.
This figure places the country roughly on par with Australia in terms of its indebtedness.
The business federation pressed the government to establish solid fiscal rules that can ensure long-term economic health, pointing to the rapid growth of debt by public companies that make up more than half of the national debt.
"Rule setting is important, as the country is suffering from lack of earnings and the government is under pressure to push forward 'populist' policies," it emphasized.
Figures show that while tax earnings rose an average of 6.9 percent from 2005 through 2012, interest paid on state debt rose 9.8 percent.
"The faster pace of increase in interest payments is putting pressure on government finances," the FKI said.
Besides public sector debt, if the money that has to go into state pensions and other obligations are counted, national debt in the broadest sense can reach a staggering 1,685 trillion won, or 132.5 percent of the country's economy, the federation claimed.
"The purpose of the FKI's assessment is to help raise the transparency and awareness of national debt and assist policymakers to make informed decision on where to spend money and cut back on unnecessary outlays," a federation official said. (Yonhap)