Government, household debt surges last year

Debt has been surging in the government and household sectors. The government sector`s rise in debt came about due to the appropriation of funds for public finances after the foreign currency crisis. However, there are concerns that public finances may become distressed. There is also a possibility that individual bankruptcies may increase as household debt rises from credit card cash advances used to for consumption. In the `2000 Money Circulation Trend (Est.)` announced on Thursday, as of end of last year, the total amount of debt in the corporate, household and government sectors was 995.4 trillion won, which corresponds to a 7% rise from the previous year.

By sector, the government posted a 13.6% increase to 82.5 trillion won while the household sector saw a rise in 10.3 percent to 293.7 trillion won. For the government sector, public enterprises including railroad, grain management and fund accounts (7~8 trillion won), together with exchange equalization bonds (13 trillion won) and housing fund (17 trillion won) have been excluded as debt.

A Bank of Korea official revealed that financial institutions had managed their funds in the more stable household sector than the corporate sector, which had seen a boost in credit risk. Corporate sector debt had risen by 4.7 percent from the previous year to 619.2 trillion won.

[Yonhap]