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S. Korea’s national debt hits record W1,700tr in 2019

Prime Minister Chung Sye-kyun speaks at a Cabinet meeting held at the government complex in Sejong on Wednesday. (Yonhap)
Prime Minister Chung Sye-kyun speaks at a Cabinet meeting held at the government complex in Sejong on Wednesday. (Yonhap)

South Korea’s national debt last year surpassed 1,700 trillion won ($1.39 trillion) for the first time, weighed down by increased treasury bond issuance coupled with the government’s consequent fiscal expansion, a government report showed Tuesday.

The national debt jumped 60.2 trillion won on-year to 1,743.6 trillion won as of end of 2019, according to the annual national financial report reviewed and endorsed by the Cabinet. The Cabinet meeting was presided by Prime Minister Chung Sye-kyun.

Government debt, which also takes municipal governments into account, increased by 48.3 trillion won on-year to 728.8 trillion won, translating into 14.09 million won in per capita debt. It surpassed the 700 trillion-mark for the first time as well.

The corresponding figures for government debt has continued to surge in the recent decade, with the figure surpassing 400 trillion won in 2011 and 600 trillion won in 2016.

The country’s consolidated fiscal balance, which is the total income minus total spending, stood at 12 trillion won in deficit, having widened by 43.2 trillion won from the previous year. This marks the deepest into the red since 2009, when the global economy was coping with the aftermath of the global financial crisis, and the corresponding figure stood at 17.6 trillion won.

The operational budget balance -- excluding the four major social welfare funds from the consolidated balance – recorded 54.4 trillion won in deficit, which was the furthest into the red since government records started in 1990. The operational budget balance is often used as a yardstick to determine the government’s actual fiscal health.

Amid all, the ratio of the government debt to its gross domestic product came to 38.1 percent at the end of last year, remaining nearly flat on-year.

The government cited tax revenue deficit and a slowdown in tax revenue growth as factors behind the growth in debt and deficit. The tax revenue has remained in the black since 2014, but last year weak corporate performance and a decline in corporate tax led to its first deficit in five years, the government explained.

Experts have been expressing concerns of growing national debt and the country’s worsening fiscal health over the government’s planned proposal of a second extra budget of 7.1 trillion won in its attempt to minimize the economic fallout from the novel coronavirus.

The National Assembly already approved an extra budget bill worth 11.7 trillion won last month.

“There is a need to prepare measures that could put a leash on the fast growth in national debt and expansion in budget deficit,” Yonsei University economics professor Sung Tae-yoon said.

Meanwhile, the same report showed that the Gyeongbu Expressway – the nation’s second oldest and one of the most heavily traveled highways – was the most expensive national property as of the end of last year, in terms of value.

The highway connects Seoul to Busan and passes by major cities including Daejeon and Daegu.

The combined value of all national properties increased by 4 percent on-year to 1,124.5 trillion won, the report showed.

By Jung Min-kyung (