Korean government executed expansionary fiscal policy as countering response against global financial crisis triggered by U.S. economy. Consequently, increase in fiscal deficit and national debt caused concerns over the fiscal soundness.
In compliance with rising national debt, financial debt of public institution snow-balled to 181 trillion won which accounts for 50 percent of national debt (359.6 tril-lion won) in late 2009. It provokes risk of contingent liabilities to be increased in government budget.
This report mainly focuses on three institutions in terms of evaluation: The Korea Land & Housing Corporation (hereinafter “LH”) with biggest debt among public institutions, Korea Railroad with surging dependency on borrowings, Korea Coal Corporation with the highest dependency on borrowings. We map out wheth-er financial debt was increased by reckless expansion of public institution, or if some projects, not much related with public institution, were implemented despite of fi-nance shortfall. And then, improvement plan was drawn up.
Based on evaluation result, besides deficit caused by government policy project, LH Corporation has soared financial debt by land development which is beyond their financial capability. Also, financial structure of Korea Railroad worsened after taking over Airport Railroad, under the situation of insufficient fund. Korea Coal Corporation confirmed their problem which sticks to bad financial structure by deteriorating efficiency of management.
Therefore, the government and the above three public institutions should con-sider introducing institutional framework, which limits investment over reckless expansion and project scope.
In addition, it is required to find out the measure that expanding sales profit as a result of cost efficiency connects to improvement in the financial structure.
In compliance with rising national debt, financial debt of public institution snow-balled to 181 trillion won which accounts for 50 percent of national debt (359.6 tril-lion won) in late 2009. It provokes risk of contingent liabilities to be increased in government budget.
This report mainly focuses on three institutions in terms of evaluation: The Korea Land & Housing Corporation (hereinafter “LH”) with biggest debt among public institutions, Korea Railroad with surging dependency on borrowings, Korea Coal Corporation with the highest dependency on borrowings. We map out wheth-er financial debt was increased by reckless expansion of public institution, or if some projects, not much related with public institution, were implemented despite of fi-nance shortfall. And then, improvement plan was drawn up.
Based on evaluation result, besides deficit caused by government policy project, LH Corporation has soared financial debt by land development which is beyond their financial capability. Also, financial structure of Korea Railroad worsened after taking over Airport Railroad, under the situation of insufficient fund. Korea Coal Corporation confirmed their problem which sticks to bad financial structure by deteriorating efficiency of management.
Therefore, the government and the above three public institutions should con-sider introducing institutional framework, which limits investment over reckless expansion and project scope.
In addition, it is required to find out the measure that expanding sales profit as a result of cost efficiency connects to improvement in the financial structure.