Gov't debt increases by 6 tril. won in 1st half

According to the standards of the International Monetary Fund (IMF), Korea's national debt increased by more than 6 trillion won in the first half of this year.

Ministry of Finance and Economy audit and inspection material submitted on Sunday revealed that the country's provisional national debt according to the standards of the IMF reached 113.7 trillion won as of the end of June, an increase of 6.38 trillion (5.6%) from the end of last year.

Out of the total national debt, the debt of the central government increased by 7.1% from 89.7 trillion to 96.1 trillion won. On the other hand, the combined debt of local governments decreased by 2% from 18.1 trillion to 17.6 trillion won.

Out of the debt of the central government, government bonds sharply increased by 11.9% from 65.8 trillion to 73.6 trillion won. However, the borrowings of the central government decreased by 6.9% from 21.3 trillion to 19.9 trillion won.

Moreover, 81.5 trillion won of the government's guarantee liabilities, which are not included in the calculation of the national debt according to IMF standards but are considered debts, at the end of the last year consisted of 13.8 trillion won in general guarantee liabilities, 64.3 trillion won in guaranteed bonds and 3.2 trillion won in guarantee liabilities for public syndication loans.

Korea's national debt according to IMF standards is rising steadily, registering 65.5 trillion at the end of 1997, 87.6 trillion won at the end of 1998 and 107.7 trillion won at the end of 1999.

Consequently, interest payments for the national debt increased from 1.94 trillion won in 1997 and 3.44 trillion won in 1998 to 5.92 trillion won in 1999.

The sharp increase is seen to be an outcome of the government's adoption of an expansion-oriented financial policy followed by extensive government bond issuances and borrowings to sustain the economy after the IMF crisis.

Kwon Soon-Hwal shkwon@donga.com