National Debt Seen to Reach 190 Trillion Won This Year

National debt will be more than 190 trillion won, about three times the amount at the close of the foreign exchange crisis, a government report projected

The ministry of planning and budgeting said at a debate on national finances on June 28 in Seoul that the national debt will reach 191.3 trillion won late this year, or 24.5 percent of GDP.

The projections represent a 25.6 trillion won rise, or 1.5 percent increase, in terms of GDP. It also about 3.17 times as much as the national debt of 60.3 trillion won at the end of 1997 when the financial crisis gripped the nation.

Per-capita debt will rise to 3.99 million won late this year from 3.45 million won last year.

National debt, which surpassed the 100-trillion-won mark, and which reached 111.4 trillion won in 2000, will be more than 200 trillion won next year.

“On average, the economy will grow 5-6 percent until 2008,” the ministry said at the meeting. “While we will increase overall spending to seven percent yearly, we won’t put a further burden on taxpayers.”

However, experts at the meeting criticized the government’s plans as unrealistic.

“While fiscal demand is rising and rising, the government has insufficient resources due to the economic recession,” said Huh Kil-haeng, the vice president of the Agrarian Economic Research Institute. “Chances are, financial management may be driven by populism.”

“Amid rising national debt, there is little known about how much a variety of national projects will cost,” Prof. Chun Joo-seong at Ehwa Woman’s University said. “The government should disclose correct information about fiscal demand.”

However, Jin Yong-gon, financial planning director at the ministry of planning and budget, said, “Given the fact that national projects take 10 years to be completed, the government is financially capable of handing them.”

Chi-Young Shin higgledy@donga.com