By Lee Hyo-sik
Staff Reporter

Korea's national debts soared to nearly 360 trillion won last year as the government outspent its earnings to prop up the sagging economy against the unprecedented worldwide economic crisis.

The Ministry of Strategy and Finance said Tuesday that the state debts surged by 50.6 trillion won to 359.6 trillion won in 2009 from the previous year, accounting for 33.8 percent of the nation's gross domestic product (GDP).

The 33.8 percent debt to GDP ratio was much higher than the 30.1 percent recorded in 2008, with the government borrowing money through bond issuance to finance a range of expansionary fiscal policies and other pump-priming measures.

The ministry said its debt-to-GDP ratio is much lower than the G-20 average of 75.1 percent and it will lower it to below 30 percent in the near future. But the ratio is projected to increase further to 35.2 percent this year, raising concerns over Korea's worsening fiscal health.

With the aging population and falling birthrates, the nation will likely spend more in the future to boost its social safety net and other welfare-related programs at the expense of the country's fiscal soundness.

But policymakers say that when the economy returns to its normal, state coffers will improve rising tax revenues and lower fiscal spending, vowing to overhaul public pension schemes and spend taxpayers' money in a more cost-effective and efficient manner.

The ministry also said the government budget account, which excludes the social security-related balance, recorded 43.2 trillion won in the red last year, up sharply from a 15.6 trillion won deficit in 2008, with the government outspending its earnings by a large margin.

The broader consolidated fiscal budget, which includes general and special accounts and state funds as well as welfare-related spending, also posted a 17.6 trillion won shortfall last year, compared with a 11.9 trillion won surplus in 2008. Government revenues totaled 255.3 trillion won in 2009, while expenditures came to 272.9 trillion won.

It said tax revenues jumped by 29.2 trillion won to 261.3 trillion won from 2008 and revenues from operating the National Pension Fund and 62 other state-run funds totaled 12.4 trillion won.

A ministry official projected that tax revenues will grow at a solid pace this year in line with an economic recovery, boosting overall government income, while expenditures will rise at a slower rate as the government discontinues an array of economy-boosting measures.