National Debt to Reach 40% of GDP This Year

  • By Lee Min-seok, Shin Su-ji

    May 20, 2019 12:34

    Korea's national debt is expected to reach 40 percent of GDP this year and even more next year.

    The government has set 40 percent as the Maginot Line for the debt-to-GDP ratio, but that is about to be breached. President Moon Jae-in presided over a meeting last Thursday and called on Finance Minister Hong Nam-ki to expand fiscal spending.

    According to the Ministry of Economy and Finance, Korea's national-debt-to-GDP ratio reflecting sovereign bonds to finance supplementary fiscal spending is projected at 39.5 percent. Next year a fiscal deficit is expected when government spending surpasses W500 trillion for the first time (US$1=W1,196).

    In that event Korea's debt is expected to surpass W780 trillion and the debt-to-GDP ratio to rise to 40.3 percent.

    Hong reportedly urged caution, but Moon pointed out that the average debt-to-GDP ratio of OECD member countries is 100 percent and asked Hong to provide a rationale for setting the 40-percent ceiling.

    Cheong Wa Dae officials, meanwhile, were still busy painting a rosy picture of Korea's economy. Jung Tae-ho, the senior presidential secretary for job creation, claimed a "comprehensive look" at various economic indicators shows the employment situation "is improving compared to last year, which is encouraging."

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