Lee Hyo-sik is Finance Desk editor at The Korea Times. He manages finance-related stories on macroeconomics, banks, stocks, bonds, crypto etc. He is passionate about covering what's happening in Korea's financial industry and explaining it to both Korean and non-Korean readers. You can reach him at leehs@koreatimes.co.kr. Your insights and feedbacks are always appreciated.
Seoul government’s debt surges
By Lee Hyo-sik
The Seoul Metropolitan Government’s debt has jumped three-fold over the past five years while former mayor Oh Se-hoon, affiliated with the governing Grand National Party, was running Korea’s largest metropolis.
Oh’s supporters say the city had no choice but to borrow more to cope with the unprecedented global economic crisis that began in late 2008.
Conversely his opponents attribute the city’s worsening financial soundness to the many of Oh’s ``pork barrel’’ development projects.
The Seoul government said Sunday that its outstanding liabilities stood at 3.82 trillion won ($3.54 billion) as of the end of 2010, up from 1.1 trillion won in 2005. The city’s debt is twice as much as that of other large municipalities, which average 1.93 trillion won.
In particular, the debt soared sharply to 3.24 trillion won in 2009 from 1.86 trillion won a year earlier as the city government borrowed heavily to finance a number of public works and create jobs in efforts to mitigate the economic downturn.
Seoul City also issued municipal bonds worth 900 billion won over the past few years to expand subway lines.
``In the wake of the international financial market meltdown in late 2008, we had to spend more than we earned to prop up the economy, unavoidably increasing municipal debt,” a city official said. “Even though the city’s financial standing worsened, we successfully weathered the fallout of the global economic slump and created hundreds of thousands of jobs.’’
But the Seoul Metropolitan Council, controlled by the main opposition Democratic Party, argue that the reckless spending spree on Design Seoul, the Han River Renaissance and other ``populist’’ projects is the main culprit behind the deteriorating financial soundness of the city government.
``Former Mayor Oh is solely responsible for the worsening municipal finance. He greedily wasted hundreds of billions of won in taxpayers’ money over the years to fund his pet projects, such as Design Seoul,’’ council member Kang Hee-yong said.