Public firms’ debts surge W34tr in 2010

Debts owed by Korea’s public corporations surged by 34.2 trillion won ($31.6 billion) in 2010 mainly due to outlays in large development projects, the government said Monday.

The finance ministry said the combined debt of 27 leading public corporations rose 14.4 percent on-year to 271.9 trillion won last year, with their debt-to-equity ratio hitting 157 percent, up from 144 percent in 2009.

Their debts, which stood at 156.5 trillion won in 2007, reached 199.7 trillion won the following year before hitting 237.7 trillion won in 2009.

The liabilities of Korea Water Resources Corp. jumped 165.7 percent on-year to 7.9 trillion won as it poured money into the controversial four-river development that aims to refurbish the Han, Nakdong, Geum and Yeongsan rivers.

LH Corp., the country’s land and housing developer, reported its debts increasing by more than 16 trillion won to 125.4 trillion won in 2010.

Besides those two corporations, debt levels of energy and natural resource developers went up as the country spent more to secure mining and oil field development rights, and limited gains in electricity prices.

Korea Electric Power Corp.’s debt grew by 4.5 trillion won to exceed 33 trillion won last year, as Seoul maintained a cap on power prices to stem inflationary pressure. Debts owed by Korea Resources Corp. and Korea National Oil Corp. rose by 64.7 percent and 44.5 percent, respectively, from a year earlier.

The ministry, meanwhile, said it will step up monitoring of new spending plans to prevent unnecessary outlays and keep close track on the financial health of public corporations with large debts. 

(Yonhap News)