National debt feared to soar on population aging: report

SEOUL, July 5 (Yonhap) -- South Korea's national debt will likely surge to nearly 1,000 trillion won (US$938 billion) in a decade as the low birthrate and aging population are feared to drive up pension and health insurance expenses, a report showed Tuesday.
According to the report provided by the finance ministry, the nation's total debt will amount to 963.5 trillion won in 2020, or 42.6 percent of the nation's gross domestic product (GDP).
The figure will keep rising in the following decades, with the debt ratio expected to grow to 61.9 percent and 94.3 percent in 2030 and 2040, respectively. In 2050, the national borrowing was projected to grow to 9,807.7 trillion won or 137.7 percent of GDP, the report showed.
The estimate was based on the government's analysis of tax burden, public pension funds and health insurance systems along with a projection of the nation's economic growth done in 2008, the ministry said.
Concerns are growing that South Korea needs to reform its social welfare programs to better cope with its changing demographic where the number of senior citizens is increasing at a faster pace than the younger and working populations.
More elderly people and less working people could place a heavy drain on government coffers by expanding welfare spending, experts worried.
The nation is currently moving fast toward an aged society, where more than 14 percent of the population is 65 or older. The nation became an aging society in 2000, when the ratio exceeded 7 percent.
"If we adhere to our current pension and health insurance systems, the aging population will come as a serious burden on our finances by driving up expenses fast," a ministry official said. "We need to launch reforms of those systems in earnest."
kokobj@yna.co.kr