Published : 2013-09-29 19:35
Updated : 2013-09-29 19:35
When put together, the national debt, the liabilities of government-owned corporations and the government’s debt guarantees have topped 1 quadrillion won ($930 billion). The figure, represented by 1 followed by 15 zeros, is beyond the comprehension of ordinary people.
During the past three years, the public-sector debt has increased 28.1 percent, from 807 trillion won to 1,033.8 trillion won. What is still alarming is that the debt’s increase can be arrested at 1,206.1 trillion won in 2017 only if it is managed as successfully as planned.
Still, the government is trying to convince people that the public-sector debt is manageable. It also says the figure may be overblown, given that internal trades have not been sorted out yet.
Moreover, it says, the assets the corporations hold in their possession exceed their liabilities. The assets held by the 41 corporations whose finances are under the control of the government are valued at 733 trillion won. They are larger than their liabilities that stand at 520 trillion won.
On the other hand, the government is promising that it will keep the debt under control by scaling down new investments, selling off assets and pushing ahead with cost cutting. It says it is also planning to raise utility bills. But that is easier said than done, as was witnessed under the administration of former President Lee Myung-bak.
The debt of government-owned, nonfinancial corporations has more than doubled during the past five years, from 195.9 trillion won to 400.8 trillion won. Primarily held accountable is the previous administration, which made itself look less spendthrift than it actually was. It did so by dumping its spending obligations on the corporations.
Most notable among the untrustworthy practices is an 8 trillion won debt that Korea Water Resources Corp. took on from Lee’s mammoth four-river reclamation project. The corporation did so, although the project’s usefulness was called into question. Now it is seeking to cut back on the debt by raising the price of tap water, angering consumers who are asking why they should pay for Lee’s folly.
It should not come as a surprise if the public looks upon President Park Geun-hye’s administration’s commitment to putting the snowballing debt of the corporations under control with a deep suspicion. People may wonder how the Park administration can tell the corporations to toe the line, given that it has already decided to spend more than it collects in taxes in each of the five years of her governance.
If it wishes to put the public-sector debt under control, the Park administration will have to set an example itself and demand that the corporations follow its lead. It needs to balance its annual budgets by curtailing costly welfare programs and adopting an unpopular policy of raising taxes before calling on the corporations to submit their debt-curbing plans.
The Park administration also needs to abstain from forcing the corporations to launch costly projects on its behalf, as its predecessor did. Such a temptation should be appealing to the administration, and all the more so, given that it has decided it cannot produce even a single budgetary surplus alone during the next five years.