S.Korea central bank report warns of surge in government debt

April 22, 2012

SEOUL, April 22 — South Korea’s government debt could surge above 100 per cent of the country’s annual gross domestic product by the year 2030 from just a little more than 34 per cent now, the country’s central bank said in a report released today.

Asia‘s fourth-largest economy would see slower growth due to the declining pace of increases in capital and labour input, whereas government spending would surge to cover financial debts at public companies and public pension schemes, it said.

“The country needs to begin drawing up counter-measures from now to get better prepared for the aged society (aging population) society and prevent macroeconomic instability in advance arising from the weakening fiscal position,” the Bank of Korea report said.

If the government did not need to provide support for the public corporations, the report said its baseline projection was for the central government’s debt to grow only modestly to 37.3 per cent of GDP by 2030. — Reuters

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