Daejeon City Conducts Comprehensive Review of Guarantee Debt... "No Issues in Local Bond Management, Ensuring Planned Repayment"

[Asia Economy (Daejeon) Reporter Jeong Il-woong] Daejeon City is conducting a comprehensive review of its guarantee liabilities. This proactive measure comes in light of recent concerns over a default situation related to the construction of the Gangwon Legoland theme park, which has raised fears of a credit market freeze.

According to the city on the 27th, as of the end of this year, the scale of the city’s local bonds is expected to reach 998.1 billion KRW, with the debt-to-budget ratio increasing to 13.5% due to the rise in local bonds.

This figure represents a 3.3 percentage point increase from 10.2% in 2018. However, the city explains that this level is still lower than the average debt ratio of 16.4% among the eight major metropolitan cities nationwide last year, and thus is not considered a cause for concern.

Nonetheless, the city emphasizes tightening control over local bond management, considering the steady increase in the scale of local bonds recently.

In fact, it is analyzed that Daejeon’s local bonds have increased due to expanded fiscal expenditures for land compensation related to long-delayed urban parks and COVID-19 response measures.

Kim Seung-tae, the city’s budget officer, stated, “It is true that the city’s debt has rapidly increased due to COVID-19 response and compensation for long-delayed parks. Therefore, the city plans to maintain fiscal soundness through rigorous local bond management and planned repayments.”

Meanwhile, to ease financial market instability, on the previous day, Lee Jang-woo, Mayor of Daejeon, along with governors from 17 cities and provinces nationwide, pledged in a joint statement to faithfully fulfill the bond payment guarantee obligations that local governments currently bear.

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