Private Sector Debt Hits 483 Trillion Won

Government debt amounted to 111.6 trillion won as of 2003 due to increased spending and repayment of public funds. Debts owed by Korea’s private sector reached 483 trillion won, with per capita debt exceeding 10 million won and per household debt reaching 31.56 million won last year.

There is a growing concern over delayed economic recovery due to the heavy debt burden of the government and individuals alike.

Financial institutions lent government, individuals, and companies a total of 1,299.4 trillion won in loans last year, a 5.7 percent increase from the 1,229 trillion won figure of 2002, said the Bank of Korea (BOK) Monday.

Government debts in particular rose sharply to 111.6 trillion won, a whopping 20.1 percent increase compared to 92.9 trillion won of 2002. It means increased Koreans’ tax burden since the government debt is financed by taxes.

“Government debt growth recorded the highest level in four years after a 31.5 percent growth in 1999,” said Kim Young-heon, the BOK official. “The government issued 26.2 trillion won worth of government and public bonds, 3.4 times more than in 2002, to increase spending and repay public funds in order to arise out of economic recession.”

Debts owed by the private sector including the self-employed and non-profit organizations amounted to 482.7 trillion won last year, a 5.3 percent increase from 458.5 trillion won of 2002.

Per capita debt exceeded 10 million won for the first time. It posted at 10.07 million won, a 4.6 percent rise from 9.63 million won in 2002.

Meanwhile, debts owed by companies increased only 4.1 percent to 705.1 trillion won in 2003 from the previous year’s 677.5 trillion won as prolonged economic recession weakened investment.

Joong-Hyun Park sanjuck@donga.com