Korea to tighten grip on public firms’ debts

The government will tighten its financial management of nearly 40 public corporations with large amounts of debt in a bid to keep them from placing a burden on the nation in the future, the Finance Ministry said Sunday.

A total of 39 public companies with assets of 2 trillion won ($1.8 billion) or more, including Korea National Oil Corp. and Korea Asset Management Corp., will be required to submit plans to improve their balance sheets by the end of June, the ministry said.

The ministry will then review their financial improvement plans before presenting them to the National Assembly in early October.

The government will tighten its grip on the finances of highly indebted public companies under two laws that were passed in April 2010 and intended to make the state fiscal position sounder, the ministry said.

“Debts owed by public companies have been growing at a fast pace,” a ministry official said. “The move is designed to preventing their debts from becoming a future burden to the nation.”

The government push comes as public corporations are saddled with snowballing debt.

The combined debt of 284 public companies, including the Korea Development Bank and four other financial institutions, came to 386.6 trillion won as of 2010, up 70 percent from four years earlier. Over the cited period, their assets rose 40 percent to 654 trillion won from 437.5 trillion won.

The ratio of public firms’ liabilities to total national debt surged to 58 percent in 2010 from 36 percent five years earlier, according to the ministry. 

(Yonhap News)