The country’s state sector saw its outstanding debt snowball to 915.6 trillion won ($808.8 billion) in first quarter of this year.

That figure was about 91 percent higher than the 480.4 trillion won recorded in the first quarter of 2008 when former President Lee Myung-bak took office, according to data by the Bank of Korea on Wednesday.

The general government sector consisting of the central government, regional governments and the national and social pension services saw its debt increase by almost 81 percent to 514.8 trillion won in that period ― the duration of Lee’s term.

The former administration’s nonfinancial enterprises, meanwhile, carried debts of 400.8 trillion won in the first quarter of this year, up from 195.9 trillion won five years earlier.

The snowballing debt under the Lee administration is attributable to spending on infrastructure such as the four-river restoration project, Korea’s Board of Audit and Inspection said.

State-owned companies such as Korea Land & Housing Corp. and Korea Water Resources had to bear the brunt of the projects’ debt obligations. Those projects were later branded by the state auditor as a failure, as the water quality of the rivers worsened.

The former administration’s debt increase is much higher than that of the administration of former President Roh Moo-hyun.

Roh’s administration saw the outstanding debt of the general government sector and nonfinancial enterprises reach 480.4 trillion won at the end of his term in 2008, up from 268.6 trillion won in the first quarter of 2003.

The debt of nonfinancial enterprises increased from 130.8 trillion won to 195.9 trillion won between 2003 and 2008, only one-third of the increase rate during the Lee administration.

However, debt of the general government during the Roh administration more than doubled to 284.5 trillion won, mostly due to increased welfare spending as Roh promoted increased wealth distribution.

The increased debt will put the incumbent administration of President Park Geun-hye to the test on financial soundness amid already high household debt compounded with extra spending.

President Park called for the government to achieve fiscal balance within her five-year term during a meeting with her ministers last month.

She said the government needs to make fiscal reforms by first redesigning its spending so that the government can bring the national debt ratio to around 30 percent of the gross domestic product.

The Korean central government’s debt amounted to 425.1 trillion won ($373.3 billion) in 2012, up 22.3 trillion won from a year earlier, according to the Ministry of Strategy and Finance.

The central government’s debt accounted for 33.4 percent of the country’s gross domestic product at the end of the first quarter. 

By Park Hyong-ki (hkp@heraldcorp.com)