Public sector spending nearly half of GDP

Spending by South Korea’s public sector jumped 46 percent in 2012 compared with five years earlier, with its total accounting for nearly half of the country’s nominal gross domestic product, the central bank said Thursday.

The public sector, which includes the central and provincial governments, and state-run companies, spent a combined 671.9 trillion won ($635.2 billion) in 2012, compared with 460.1 trillion won in 2007, according to the Bank of Korea.

The amount accounted for 48.8 percent of the nominal GDP in 2012, up from 44.1 percent in 2007, it added.

The data was tallied in accordance with the system of national accounts 2008, the latest version of the international statistical standard for calculating national accounts.

“Since the global financial crisis, the role of the public sector has become important,” Cho Yong-seung, the director of the BOK’s monetary and financial statistics division, said in a press conference. “The data will help (us) understand the public sector’s spending and fiscal conditions.”

The BOK said the government needed more accurate data on the public sector as state-run firms and their debt holdings make up a large portion of the total.

It said that the gap between gross income and total spending posted a shortfall for the fifth straight year in 2012 as massive state-run construction projects such as the four-river restoration sapped taxpayers’ money.

Total expenditures by the central and provincial governments reached 450.8 trillion won in 2012, up 141.2 trillion won from 2007, the BOK said.

Spending by the central and provincial governments accounted for 32.7 percent of the GDP in 2012, below the average 42.4 percent for member countries of the Organization for Economic Cooperation and Development.

Nonfinancial public firms spent 189.1 trillion won in the cited period, and financial state-run firms, including the BOK, spent 35.9 trillion won in 2012, the BOK said. (Yonhap)