South Korea`s total national liabilities snowballed to a record high of 1,985 trillion won ($1,770 billion) last year as Asia’s fourth largest economy implemented expansionary fiscal spending to tackle the economic fallout of the coronavirus pandemic.
Korea’s total liabilities that include the national debt and state pensions to be paid later to civil servants and veterans amounted to 1,985.3 trillion won in 2020, marking the largest-ever on-year increase of 241.6 trillion won since 2012, according to the government’s settlement report approved by the Cabinet on Tuesday.
The debt size also exceeded that of the country’s nominal gross domestic product (GDP) for the first time.
The financial ministry attributed the big jump in national liabilities to a surge in treasury bond sales to finance the government’s expansionary fiscal spending to mitigate the fallout of the Covid-19 pandemic crisis. Total government bond sales increased 111.6 trillion won last to cover four rounds of extra budgets totaling 67 trillion won.
As a result, the national debt (D1), which covers bond sales and other financial borrowing by central and provincial governments, reached 846.9 trillion won last year, up by 123.7 trillion won from a year ago. Accordingly, the country`s debt-to-GDP ratio came to 44.0 percent as of 2020, up from 37.7 percent the previous year.
Another factor for the gain in national debt was an increase of 100.5 trillion won in the government’s provisions for national pensions to be paid civil servants and veterans.
The government’s fiscal deficit also widened last year as the state’s pandemic-related spending mounted while tax revenues declined.
The government’s income totaled 478.8 trillion won in 2020, up by 5.7 trillion won from a year ago, whereas its expenditure totaled 549.9 trillion won, up by 64.9 trillion won, leading to a fiscal deficit of 71.2 trillion won, the largest ever. The figure against GDP was -3.7 percent, the worst level since -3.9 percent tallied in 1982.
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