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S. Korean public sector's debt jumps over past 5 years

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(Globalpost/GlobalPost)

SEOUL, June 19 (Yonhap) -- The debt held by South Korea's public sector sharply rose over the past five years, data showed Wednesday, dealing another blow to a country which is grappling with high household debt.

The public sector's debt stood at 915.6 trillion won (US$808.8 billion) as of end-March, up 51.9 trillion won from the end of last year, according to data by the central bank.

The public sector includes the central and provisional governments and state-run companies.

The figures jumped 90.6 percent from the end of the first quarter in 2008 when former President Lee Myung-bak took office.

The public sector's debt sharply rose over the past five years into February 2013 as the previous government financed large-scaled construction deals including the controversial four-river refurbishment project via debt sales by state-run firms, experts say.

The debt holdings of public firms more than doubled to 400.8 trillion won as of the end of March, compared with the end of March 2008, data showed.

The public sector's indebtedness under the government of former President Roh Moo-hyun, Lee's predecessor, rose 78.8 percent during his five-year term between February 2003 and February 2008.

In the cited period, the debt of public companies gained some 50 percent to 195.9 trillion won, data showed.

Sharp growth in debt by state-run firms has been cited as one of the potential risks for Korea, but it is not tallied as government debt when calculated under the latest international standards.

Mindful of criticism over statistics inaccuracies, the finance ministry said in February that Korea plans to provide additional figures on public debt including public firms' debt holdings in a bid to offer a more accurate picture of financial conditions in the public sector.

Korea's household credit declined to 961.6 trillion won as of end-March after hitting a record high of 963.8 trillion won in the fourth quarter of 2012.

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http://www.globalpost.com/dispatch/news/yonhap-news-agency/130618/s-korean-public-sectors-debt-jumps-over-past-5-years