Gov't debt must not top 40 pct of GDP: finance minister

South Korea's government debt should not exceed 40 percent of the nation's gross domestic product despite more spending needs and decreased tax revenue stemming from slowing growth, the top policymaker said Wednesday.

Addressing lawmakers of the Special Committee on Budget and Accounts at parliament, Finance Minister Choi Kyung-hwan pointed out that since the global financial crisis of 2007-2008, government debt of most key countries has risen, but Seoul has managed to rein in its debt level.

"The size of debt and fiscal deficit is moderate compared with other Organization for Economic Cooperation and Development economies," said Choi, who doubles as deputy prime minister for economic affairs.

Before the financial crisis, the average government debt level among OECD countries stood at 73 percent. It has since risen to 115 percent.

In contrast, South Korea's debt moved up 8.8 percentage points, while its fiscal deficit stands at under 2 percent of the GDP, which is much better than the 3 percent level advocated by the OECD.

Even before he took office last year, South Korea's government debt surpassed 35 percent of the GDP. The minister said to push it down to the 30 percent level, measures must be taken to cut welfare spending.

Choi said in the future, debt and the fiscal deficit will be managed carefully based on various economic considerations.

The finance minister, meanwhile, said earlier in the day that it is a shame the Federation of Korean Trade Unions delayed returning to the tripartite committee aimed at resolving labor market issues. The umbrella union said it will make a decision on returning next week.

Talks have been stalled since early April after the union opposed any moves that can make it easier to fire workers.

The committee is made up of representatives from local labor organizations, the government and the business sector.

"Making headway on talks is critical in resolving unemployment among young adults," he claimed.

The policymaker said the government will push for compromise, but he made it clear that labor reforms are a matter that must be addressed if the country is to make the next leap forward. (Yonhap)