The South Korean government will reduce the debt ratio of public corporations to 152 percent by 2021 as part of its efforts to improve the balance sheets of state-funded agencies, the finance ministry said Wednesday.

Under a long-term financial management plan, 38 public firms, including the Korea Electric Power Corp. and the Korea Land & Housing Corp., are required to maintain their debt-to-total asset ratio at an average of 152 percent from 178 percent in 2016 in the next five years, according to the Ministry of Strategy and Finance.
 

Their total debt will likely expand to 510.1 trillion won in 2021 from 474.4 trillion won in 2016, but the finance ministry said an increase in their total assets to 334.5 trillion won from 266.7 trillion won between 2016 and 2021 will reduce the debt ratio.

This year's long-term debt ratio estimate is slightly higher than last year's plan that expected the number to reach 151 percent in 2020.

The finance ministry said a sharp hike in KEPCO's debt ratio stemming from the government-led electricity bill adjustment last year affected the five-year debt management plan.

KEPCO's debt-to-asset ratio will jump to 116 percent from 96 percent over the 2016-2021 period, while other heavyweight firms like LH will see its figure fall to 266 percent from 312 percent.

"The government will make constant efforts to have corporations improve their balance sheets," the ministry said. (Yonhap)