South Korea will tackle the country's vexing household debt problem as a major agenda under the recently unveiled three-year economic innovation plan, the finance minister said Wednesday.
On Tuesday, the government announced a package of policy directions along with detailed measures to be carried out over the next three years aimed mostly at raising the country's growth potential.
They include easing regulations, reforming public organizations and solving other problems hampering the country's economic growth. Household debt was cited as one of the problems dragging down the nation's economy.
"Household debt problem has cumulated for a long time. Without resolving it, stabilizing the financial market and boosting domestic demand would prove difficult," Finance Minister Hyun Oh-seok told a meeting with other economy-related policymakers in Seoul.
"Accordingly, the government will push to stabilize household debt as a major agenda in the three-year innovation plan," he said. "We will aim to reduce the household debt ratio to disposal income by five percentage points by the end of 2017," reaffirming the goal announced by President Park Geun-hye a day earlier.
As of the end of 2012, the debt-to-income ratio stood at 164 percent. The government said the ratio may have risen to an upper range of 160 percent at the end of 2013. Final figures are expected to be released in a few months.
Economists point to household debt as a persistent problem for the economy, as high indebtedness in the private sector is feared to hurt domestic demand. South Korea's household debt rose to a record high of 1,021 trillion won ($954 billion) as of the end of December, according to the central bank. (Yonhap News)