Published : 2014-01-26 09:42
Updated : 2014-01-26 09:42
South Korea is considering introducing a bankruptcy system for highly indebted local administrations to make them more responsible for fiscal soundness, the home affairs ministry said Sunday.
Under the envisioned system, local administrations may be declared bankrupt when they are unable to pay back matured debts for 30 days or more, according to the Ministry of Security and Public Administration.
"The ministry began a study on introducing a bankruptcy system so that local governments will take greater responsibility for their finances," a ministry official said.
The planned system is designed to enable local governments saddled with debt to recover their financial health and normally provide administrative services, he added.
But it is still undecided whether the central government will declare bankruptcy for financially troubled municipalities or allow local administrations to apply for insolvency, the official said.
In his New Year's press conference, Hwang Woo-year, the chief of the ruling Saenuri Party, said the party may weigh the introduction of such a system as part of efforts to make local governments more financially sound.
However, experts said the ministry's plan may face strong opposition because it could undermine the autonomy of local governments, the backbone of home rule. (Yonhap News)