my timesThe Korea Times

ED Swelling national debt

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  • Published KST
  • Updated KST

The amount of debt owed by our central and local governments surpassed 600 trillion won last year. The figure was exactly 627.1 trillion won _ 12.24 million won per capita. The government debt has been swelling due largely to expansionary fiscal policies intended to stimulate the economy.

Nonetheless, Korea’s fiscal health is undoubtedly good. The government debt is equivalent to 38.3 percent of Korea’s gross domestic product, which is far lower than the OECD average of 116.3 percent.

The problem is that our overall national debt, which includes the liabilities of civil servant and military pension payments, exceeded 1,400 trillion won for the first time. The national debt grew by nearly 140 trillion won last year to 1,433 trillion won.

Strictly speaking, the liabilities are not debt. They are just an estimated debt on the balance sheet showing the amount of pensions to be paid out to current and future recipients over the next 70 years. But if the payment faces a shortage, it must be covered by taxpayers’ money. The civil servant and military pensions received 2.3 trillion won and 1.3 trillion won, respectively, from state coffers last year.

The government overhauled the pension plan for government officials in 2015, freezing the annuity and delaying the payment date. But the reform was cosmetic in the face of tough protests from civil servants. The continuing rise in the number of public servants and military personnel is the prime cause for their swelling pension liabilities. The number of pensioners is also rising.

Against this backdrop, some presidential candidates have pledged to increase the number of public officials irresponsibly. Moon Jae-in, the front-runner for the May 9 presidential election, said he would expand 810,000 jobs in the public sector, if elected.

Of course, some pundits discount excessive concerns about the liabilities, saying they are just estimated numbers. But the public’s burden for civil servants and military pensions will grow because of the aging population.

Given that there is no other alternative but to make up for the shortfall with tax money, the next administration should push for further reform of the public-sector pensions by making beneficiaries pay more and receive less.