National Debt Exceeds 130 Trillion Won

The national debt has rapidly risen to exceed 130 trillion won according to official government statistics.

Due to increased national debt, the government will have a hard time responding to the economic downturn, insolvent households, the nuclear threat from North Korea, and problems of the aging society, through fiscal policies.

The Ministry of Finance and Economy estimated on April 13 that as of the end of 2002 the national debt rose to 133.6 trillion won, an increase of 11.5 trillion won from the end of 2001.

The figure increased by 103.7% or 68 trillion won from 65.6 trillion won at the end of 1997.

It seems that the national debt doubled for five years during the Kim Dae-jung administration because they helped financial institutions, companies and the jobless through fiscal policies in order to recover from the 1997 economic crisis.

Even after the country recovered to some extent, the national debt continued to rise to 98.6 trillion won at the end of 1999, 111.3 trillion won at the end of 2000, 122.6 trillion won at the end of 2001, and finally 133.6 trillion won at the end of last year.

The total debt accounts for 22.4 percent of the country`s gross domestic product (GDP), up slightly from 22.1 percent in the previous year. This figure stood at 21.3 percent in 2000 and 20.4 in 1999.

The debt for local governments dropped by 1.8 trillion won compared with that of a year ago, while the debt of the central government jumped 13.5 trillion won.

In addition, different from the national debt, government guaranteed debt was estimated to have fallen 4.2 trillion won to 102.4 trillion won as compared with that of a year ago, as the Korean Deposit Insurance Corporation (KDIC) and the Korean Asset Management Corporation (KAMCO) repaid part of their debts.

“The average national debt to GDP ratio amounts to 73% of Organization for Economic Cooperation and Development (OECD) average,” said Choi Kyu-yeon at the Ministry of Finance and Economy. “The ratio of Korea is well below average,” he added.

Some financial analysts, however, point out that it is hard to estimate the accurate amount of the national debt only through official government statistics. “The Korean government’s fiscal deficit may have reached dangerous levels,” they added.

Kwang-Am Cheon iam@donga.com