The Korean government and nonfinancial public institutions owed 957.3 trillion won ($816 billion) to creditors at the end of 2014, up 6.5 percent from a year ago, the Finance Ministry said in a report. The pace of debt growth was faster than the 3.3 percent of the Korean economy last year.
The debt was tantamount to 64.5 percent of the country’s GDP. From a year ago, when the debt-to-GDP ratio was 62.9 percent, it represents an increase by 1.6 percentage points.
“Korea’s public debt level is among the lowest of the OECD member countries,” the Finance Ministry said in the report.
Although international comparison of public-sector debt levels is not easy due to the different ways countries calculate liabilities, the Korean level is widely agreed to be low.
The Korean figure -- 957.3 trillion won -- is comprised of general government borrowings (620.2 trillion won) and nonfinancial public agencies’ debt (408.5 trillion won) minus the total amount of internal transactions (71.2 trillion won).
Of the seven OECD member countries that release comparable data, Seoul had the second-lowest level after Mexico.
Korea had the fifth-lowest ratio of government debt to GDP, which is more widely comparable, among 27 of the OECD members. The U.S., Canada, France and many other countries had a reading over 100 percent, while that of Japan was well beyond 200 percent.
Sound public finances were among the reasons cited by global credit ratings agency Moody’s last week when it raised the country’s sovereign rating by one notch. It gave Korean debt a credit rating of Aa2, which is the third highest on its scale and the highest ever given to Korea.
In May, the International Monetary Fund had noted in its annual report on health of the economy that “Korea’s low public indebtedness provides ample room for additional fiscal stimulus and reinforced social safety nets.”
This year, the Korean government took an expansionary fiscal policy stance and rolled out measures to boost private consumption, as the country’s export-driven economy stumbled amid week global demand.
The Finance Ministry earlier this month lowered its growth outlook to 3.1 percent from the previous 3.3 percent.
The government, despite the expansionary fiscal policy stance, is aiming to keep general government debt around 40 percent of the GDP by 2019, the ministry said. The 2014 level was 41.3 percent.
By Lee Sun-young (firstname.lastname@example.org)