In 2025, 40 Public Institutions' Debt Reaches 639 Trillion Won... 10 Institutions' Debt Ratios Exceed 200%

[Sejong=Asia Economy Reporter Kim Hyunjung] By 2025, the debt scale of 40 domestic public institutions is expected to reach 639 trillion won. The debt ratio is projected to soar to 172.5% next year before easing somewhat to around 162.6%. Four years from now, the number of public institutions with a debt ratio exceeding 200% is expected to reach 10, including Korea Land and Housing Corporation (LH) and Korea Railroad Corporation (KORAIL).

On the 31st, the Ministry of Economy and Finance announced that it will submit the 2021-2025 mid- to long-term financial management plan for public institutions, which includes these details, to the National Assembly on the 3rd. According to the Public Institution Management Act, public enterprises and quasi-governmental institutions with assets exceeding 2 trillion won, or those with government loss compensation clauses or capital erosion, must submit a five-year financial outlook. Currently, 40 institutions fall under this category.

Over the next five years, the assets and debt scale of these institutions are expected to increase. The total asset size, which was around 830 trillion won last year, is expected to grow to 877.8 trillion won this year, 924.7 trillion won in 2022, 962.7 trillion won in 2023, and 995.1 trillion won in 2024. In 2025, it will surpass 1,031.8 trillion won, breaking the 1,000 trillion won mark.

Regarding this, the Ministry of Economy and Finance explained, "The increase in assets is due to housing supply measures related to real estate policies, expansion of infrastructure such as power, roads, and railroads, and increased support and investment in essential areas of public life such as housing and corporate support through policy finance."

Debt is expected to increase from 512.1 trillion won last year to 549.6 trillion won this year. It will continue to rise annually, reaching 606.9 trillion won in 2023, changing the leading digit, and is projected to swell to 638.9 trillion won in 2025.

Regarding the increase in debt, the Ministry of Economy and Finance added, "It is due to the issuance of bonds and borrowings to cover some of the shortfalls in funds required for projects and investments, as well as increases in accounts payable arising during project processes." This includes LH’s rental deposits, Korea Electric Power Corporation’s fuel purchase costs, LH’s pre-sale installment payments, unpaid insurance benefits of the National Health Insurance Service, and Korea Electric Power Corporation’s nuclear power plant post-treatment provision liabilities. The Ministry forecasts that the ratio of financial liabilities such as bonds and borrowings to total assets will remain between 48% and 49% over the five years.

The government predicts that the debt ratio will fall from 161.1% last year to 167.5% this year. It is expected to soar to 172.5% next year before steadily improving to 162.6% in 2025.

Net income recorded a surplus of 2.9 trillion won last year, but the surplus is expected to shrink to 700 billion won this year. It is forecasted to reach 3 trillion won next year, improve to 6.7 trillion won in 2023, 7.8 trillion won in 2024, and increase to 10.3 trillion won in 2025.

The government stated, "While steadily supporting mid- to long-term investment factors, we will continue multifaceted financial soundness management efforts for public institutions," adding, "For institutions where financial soundness deterioration is a concern by the end of the year, we plan to prepare customized management efficiency and accountability enhancement measures according to the characteristics of each institution."

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