Lee Min-hyung joined The Korea Times in 2014 and has worked as a journalist mainly in Korea’s finance, tech and automotive industry. He specializes in content creation, breaking news and in-depth analysis currently on transportation and mobility. You can reach him via mhlee@koreatimes.co.kr.
Korea's national debt snowballing amid pandemic aftershock
Kang Seung-joon, center, chief of the finance ministry's Fiscal Management Bureau, speaks during a briefing at the Government Complex Sejong, Tuesday. Yonhap
By Lee Min-hyung
By Lee Min-hyung
Korea's government liabilities approached an all-time high of 2,000 trillion won ($1.78 trillion) in 2020 after authorities carried out an unprecedentedly strong level of anti-COVID-19 pump-priming measures, the Ministry of Economy and Finance said Tuesday.
According to a year-end audit report, the nation's total liabilities surged by 241.6 trillion won to reach 1,985.3 trillion won in 2020, compared to the previous year. Last year is the first time since 2012 that the figure surpassed 100 percent of the GDP, which came in at 1,924 trillion won last year.
The historic level of debt is attributable to the increased amount of government bond issuance throughout last year, when the government executed a series of super-expansionary budgets to rev up the virus-hit economy by offering emergency relief funds to the public, according to the finance ministry.
The national debt, which excludes pension liabilities for government officials and soldiers from total liabilities, also reached 846.9 trillion won, up by 123.7 trillion won, during the same period. The concept of the national debt is a narrower notion, compared to that of total liabilities, which includes the government's future debt liabilities as well.
Individual taxpayers will contribute 16.34 million won on average toward the 2020 national debt, up by 2.25 million won from the previous year.
“It is common for any governments to have reported a large-scale fiscal deficit last year, as part of their efforts to deal with the COVID-19 shock by pushing for fiscal expansion,” a ministry official said during a briefing, Tuesday. “Korea's national debt status is not as bad as that of the global average or of some developed countries.”
According to the ministry, the national debt here remains far below the average of the OECD member countries. The average debt growth rate from OECD countries during 2009 and 2019 reached 18.8 percent, but that of Korea is merely 10.8 percent, according to the finance authority.
According to the report, Korea's total government assets also increased to 2,490.2 trillion won in 2020, up by 8.3 percent from the previous year. The growth was driven by the National Pension Service's profit increase, amid the virus-induced stock market boom here and abroad throughout last year.
“The point is that fiscal expenditures are on the rapid rise here, and the pace of the budget spending will accelerate down the road due to the aging population,” Kang Hyun-ju, an economist at the Korea Capital Market Institute, said.
“Given the rapidly aging society, the Korean government will likely face difficulties in slowing down the debt growth speed for the next few years.”