By Yoon Ja-young
Government debt increased by 93 trillion won last year, amid snowballing pensions for former civil servants and the military.
Experts agree that the country is in urgent need of pension reform.
According to the Ministry of Strategy and Finance, which closed its accounts for the 2014 fiscal year, the broader definition of government debt including pensions for government workers stood at 1.211 quadrillion won as of the end of the year. That is 93.3 trillion won more than a year ago.
The ministry explained that the increasing debt was due to a decrease in tax income from the sluggish economy coupled with the issuance of government bonds to boost the economy.
The increasing burden from government employees' and military pensions also added to the government debt.
The broader definition of government debt includes the current value of pensions that the government should pay recipients. Though the government hasn't borrowed the money, it is regarded as debt as it will be paid in the future.
This future debt to fund pensions stood at 643.6 trillion won as of the last year, up 47.3 trillion won from the previous year. It is increasing each year due to the growing number of pension recipients.
"The reform of government employees' pensions has become the urgent topic of our time as government debt is snowballing to make up for the deficit," said Noh Hyeong-ouk, deputy minister for fiscal affairs.
Among the 643.6 trillion won, pensions for government employees stood at 523.8 trillion won and military pensions at 119.8 trillion won.
These pensions have been sustained with taxpayers' money and the burden is expected to increase each year.
According to the government, 2.9 trillion won will be injected to make up for the deficit in government employees' pensions this year, with the figure expected to increase to 3.7 trillion won next year and to 5 trillion won in 2018.
He added that while the country's fiscal health is sound compared with other countries, it should be managed more carefully in the long-term when considering the low birthrate and aging society which will incur increasing social welfare spending.
Total government debt stood at 773.5 trillion won in 2011, but it jumped by 56.6 percent in just three years.
Park Jong-kyu, a senior research fellow at the Korea Institute of Finance, said the fiscal health is likely to deteriorate when considering that the country's social welfare hasn't matured yet. "The social expenditure will naturally rise as time goes by," he said, advising the government to be cautious in expanding social welfare.
"Once a country becomes an aged society, fiscal health deteriorates rapidly. The number of taxpayers will decrease as the baby boomers retire en masse, while more money will be needed to care for senior citizens," he added.
Government debt increased by 93 trillion won last year, amid snowballing pensions for former civil servants and the military.
Experts agree that the country is in urgent need of pension reform.
According to the Ministry of Strategy and Finance, which closed its accounts for the 2014 fiscal year, the broader definition of government debt including pensions for government workers stood at 1.211 quadrillion won as of the end of the year. That is 93.3 trillion won more than a year ago.
The ministry explained that the increasing debt was due to a decrease in tax income from the sluggish economy coupled with the issuance of government bonds to boost the economy.
The increasing burden from government employees' and military pensions also added to the government debt.
The broader definition of government debt includes the current value of pensions that the government should pay recipients. Though the government hasn't borrowed the money, it is regarded as debt as it will be paid in the future.
This future debt to fund pensions stood at 643.6 trillion won as of the last year, up 47.3 trillion won from the previous year. It is increasing each year due to the growing number of pension recipients.
"The reform of government employees' pensions has become the urgent topic of our time as government debt is snowballing to make up for the deficit," said Noh Hyeong-ouk, deputy minister for fiscal affairs.
Among the 643.6 trillion won, pensions for government employees stood at 523.8 trillion won and military pensions at 119.8 trillion won.
These pensions have been sustained with taxpayers' money and the burden is expected to increase each year.
According to the government, 2.9 trillion won will be injected to make up for the deficit in government employees' pensions this year, with the figure expected to increase to 3.7 trillion won next year and to 5 trillion won in 2018.
He added that while the country's fiscal health is sound compared with other countries, it should be managed more carefully in the long-term when considering the low birthrate and aging society which will incur increasing social welfare spending.
Total government debt stood at 773.5 trillion won in 2011, but it jumped by 56.6 percent in just three years.
Park Jong-kyu, a senior research fellow at the Korea Institute of Finance, said the fiscal health is likely to deteriorate when considering that the country's social welfare hasn't matured yet. "The social expenditure will naturally rise as time goes by," he said, advising the government to be cautious in expanding social welfare.
"Once a country becomes an aged society, fiscal health deteriorates rapidly. The number of taxpayers will decrease as the baby boomers retire en masse, while more money will be needed to care for senior citizens," he added.
