S. Korea to face growing debts due to aging population

SEOUL, June 22 (Yonhap) -- South Korea's national debt could multiply to more than four times its current level in less than four decades due to the country's fast-increasing aged or retired population, unless the government overhauls both its welfare and taxation systems, a government advisory committee said Wednesday.
In 2010, the government recorded a deficit of 1.1 percent of the country's gross domestic product (GDP), according to the government financial policy advisory committee.
It said the country's annual government debt could reach 8.3 percent of the 2010 GDP in 2050, when, according to an earlier report by the Korea Institute of Finance, the proportion of people aged 65 years or older will reach 38.2 percent of the entire population.
Accumulated government debt will reach 137.7 percent of the 2010 GDP in 2050, unless the government quickly begins collecting more taxes and spending less, the committee said. The country's public debt currently stands at 33.5 percent of the GDP in 2010.
"Even if the current systems are maintained, it will be impossible to maintain the stability of government finances as pension and medical expenses will steeply rise," the committee said in a Seoul forum jointly organized by the Finance Ministry and the state-run Korea Development Institute.
bdk@yna.co.kr