S. Korea’s public sector debt hits 898.7 tln won, equal to 62.9 pct of GDP

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SEJONG, Dec 20 – South Korea’s public sector debt rose to 898.7 trillion won (US$815.9 billion), equivalent to 62.9 percent of the country’s gross domestic product, in 2013, the government said Friday.

According to the finance ministry, the country’s public sector debt, or D3, that takes into account both general government and non-financial corporation debts rose 77.7 trillion won from the year before. Of the total gain, 61 trillion won was incurred by government-issued bonds to stabilize the foreign exchange market and cover the deficits in its general account.

General government debt stood at 565.6 trillion won, while non-financial corporation debt stood at 406.5 trillion won, with 73.4 trillion won being deducted because it involved internal transactions.

The latest findings showed that compared to the seven countries that release D3 debt figures among Organization for Economic Cooperation and Development (OECD) members, Seoul’s debt vis-a-vis the GDP was the second lowest after Mexico, with Japan, Portugal, Canada, Britain and Australia all having larger liabilities.

The finance ministry, which is in charge of the country’s economic policy setting, said despite public debt being manageable at present, it is still committed to pushing for fiscal balance.

“The government, for the time being, must pursue an expansionary fiscal policy stance to fuel economic growth, but it must actively strive for financial health,” an official said.

South Korea’s public sector debt, when measured solely in general government debt, or D2, was the fifth smallest among OECD members. D2 only calculates national debt and non-profit public institution debt.