Park Won-soon, who was elected Seoul mayor last year, will now have to make a choice between two of his key election promises ― cutting the city’s debt by 7 trillion won ($6.5 billion) and the building of 80,000 low-rent homes, both by 2014. That is the conclusion of a recent report on the metropolitan government’s finances.

According to the report commissioned by the metropolitan government, Seoul had a debt of 18.7 trillion won at the end of last year ― not a small sum by any measure. No less troubling is a potential debt of 2.3 trillion won, which the report says is a conservative estimate.

Seoul’s finances had been sound until 2002, when its debt amounted to 6.9 trillion won. But it soared by 4.8 trillion won during Lee Myung-bak’s 2002-06 mayoralty and by another 7 trillion won during Oh Se-hoon’s 2006-11 governance. The debt ballooned mainly because Seoul’s homebuilder, SH Corp., launched big-ticket land development projects. Now Park will have to clean up the mess if he desires Seoul to remain fiscally sustainable.

On top of the huge debt is a potential debt of 2.3 trillion won, which includes minimum subsidies for private operators of a subway line, a tunnel and other public facilities. They built the facilities on a promise from the metropolitan government of a steady stream of revenues during their long-term operations. The potential debt also includes support for bus companies.

The report warns the potential debt, if not properly managed, will prove to be a major drag on the city’s finances in the years ahead. Proper management of the debt is easier said than done, as evidenced by the metropolitan government’s recent fierce dispute with the subway No. 9 operator over its plan to increase the fare. The dispute was settled when the metropolitan government agreed to pay 43 billion won to make up last year’s fall from the guaranteed minimum revenue.

In his effort to reduce losses from the operation of other subway lines as well as the No. 9 line, Park called on the central government to provide 800 billion won in subsidies for senior citizens’ free rides, claiming the central government must be held responsible for such a welfare program. But his request was turned down.

Now Park will do well to scale down his housing project for low-income families. He cannot focus on the welfare program when the city’s debt is threatening to get out of control.