Public-sector debt ratio to fall below 200 pct this year: gov't

South Korea's public-sector debt ratio is expected to fall below the 200 percent mark in 2015 for the first time in five years thanks to reforms and measures taken to enhance state companies' fiscal health, the government said Wednesday.

In its 2015-2019 mid- and long-term fiscal management plan, the finance ministry predicted total debt will likely stand at 496.6 trillion won ($421 billion) by year's end, down 1 trillion won from a year earlier.

This will push down their combined ratio of debt to net worth to 197 percent from the 216 percent last year.

The figure covers the 39 state-operated corporations and institutions that must submit fiscal management plans.

 The debt ratio for state corporations shot up to 206 in 2011 from 170 percent a year earlier and soared to 230 percent in 2012-2013, but numbers have been falling after the government started reigning in expenditures as of last year.

"If the 197 percent target is reached, it will mean the government reaching the goal two years ahead of schedule," the ministry said. "In the future, every effort will be made to control public sector debt so as not to burden the overall economy."

The ministry also forecast public corporations' earnings should improve this year.

The combined net profit of the 39 public companies could reach 17.2 trillion won, up a sharp 49.6 percent from the previous year.

The spike is mainly due to the sale of the Korea Electric Power Corp. headquarters in Seoul to Hyundai Motor Group.

"The government will continue to push for the sale of unnecessary property and streamline operations that can improve the efficiency of public corporations," the ministry said.

Public companies will not be able to issue debts without due cause, with a cap placed on the total amount of corporate bonds that can be issued, it said.

In the long term, the ministry said public sector debt will rise to 508.2 trillion won in 2016 but will remain more or less stable at 507-510 trillion won from 2017 through 2019.

Earnings of state corporations will dip to 11.4 trillion won in 2016 but rise to 14.1 trillion won in the following year before dropping again to 11 trillion won in 2018, the ministry said. (Yonhap)