Public Institutions Hit by COVID-19... Projected Deficit of 3 Trillion Won This Year

2020-2024 Public Institutions Mid- to Long-Term Financial Management Plan

Comparison of Debt Scale and Ratio Forecasts (Trillion KRW, %)

[Sejong=Asia Economy Reporter Kim Hyunjung] The government expects that 39 major domestic public institutions will incur losses totaling 3 trillion won this year due to the impact of the novel coronavirus infection (COVID-19) crisis. The scale of debt is also expected to surge to over 90 trillion won by 2024.

The Ministry of Economy and Finance announced on the 1st that it will submit the "2020?2024 Mid- to Long-term Financial Management Plan for Public Institutions" to the National Assembly on the 3rd. The mid- to long-term financial management plan evaluated and analyzed changes compared to the previous plan (2019?2023) and financial management measures for a total of 39 public institutions, including 22 public enterprises with assets over 2 trillion won and 15 quasi-governmental agencies, as well as coal corporations and KOTRA, which the government is compensating for losses.

According to this plan, the government judged that over the next five years, the assets and debt scale of the 39 major public institutions will increase, and the debt ratio will reach about 171.4% by 2024. Total assets will steadily increase from 794.6 trillion won in 2019 to 824.5 trillion won this year, 860.4 trillion won in 2021, 901 trillion won in 2022, 934.2 trillion won in 2023, and 975.1 trillion won in 2024.

Debt will increase from 497.2 trillion won last year to 521.6 trillion won this year. It is expected to rise to 540.8 trillion won next year, 571 trillion won in 2022, 591.1 trillion won in 2023, and 615.8 trillion won in 2024.

The debt ratio, which was 167.1% last year, is expected to rise by 5.1 percentage points to 172.2% this year. The increase in debt is attributed to the decrease in income and increase in expenditures of public institutions due to the COVID-19 crisis, policy financial support to overcome COVID-19, and expanded investments by major institutions such as Korea Electric Power Corporation and Korea Land and Housing Corporation (LH). The debt ratio is expected to rise from 169.2% in 2021 to 173% in 2022, then improve to around 172.2% in 2023 and 171.4% in 2024.

To manage financial soundness, the government plans to monitor the progress of the mid- to long-term financial management plan, including investment execution and debt management by each public institution, and reflect the implementation performance in annual management evaluations. For institutions with concerns about financial sustainability such as capital erosion, the government will manage them together with the relevant ministries, and to prevent excessive increases in project costs, it plans to establish total project cost management guidelines and strengthen financial soundness management by addressing excessive borrowing practices and contingent liabilities.

This content was produced with the assistance of AI translation services.