National debt expected to rise by over 25 tln won in 2012

SEOUL, Oct. 2 (Yonhap) -- South Korea's national debt is likely to rise by more than 25 trillion won (US$21.1 billion) in 2012 from this year due to an increase in state bond issues, a government report showed Sunday.

According to the report by the finance ministry, the country's national debt is estimated to reach 448.2 trillion won next year, up 25.5 trillion won from 422.7 trillion won this year.

This year's tally represents a 7.8 percent increase from last year's 392.2 trillion won, which was ascribed mainly to a surge in Treasury issues.

Of next year's government debt, 222 trillion won, or 49.5 percent of the total, should be repaid with taxpayer money, the report said. The percentage is up slightly from 48.5 percent for this year and the highest ever.

The report also said the outstanding amount of government-guaranteed debt will likely reach a record high of 38 trillion won next year.

The report, however, expected South Korea's national debt to decrease after 2012 as the government plans to take a series of measures to trim government liabilities.

The growth rate of state debt is likely to drop to the 1 to 2 percent range from 2013, with the amount coming to 460 trillion won in 2013, 466.4 trillion won in 2014 and 471.6 trillion won in 2015.

With the growth rate of the economy outstripping that of state debt, the ratio of national debt to gross domestic product is projected to drop to 32.8 percent next year from this year's 33.3 percent, the report showed. The ratio reached a record high of 33.4 percent in 2010.

The finance ministry said it plans to step up efforts to reduce national debt by eliminating tax breaks, selling state assets and overhauling government expenditures.