The South Korean government will reduce the debt ratio of public corporations by 11 percentage points to 156 percent by 2022 as part of its efforts to improve the balance sheets of state-funded entities, the finance ministry said Friday.
Under a long-term financial management plan, 39 public firms, including the Korea Electric Power Corp. (KEPCO) and the Korea Land & Housing Corp. (LH), are required to maintain their debt-to-total asset ratio at an average of 152 percent from 167 percent in 2017 in the next five years, according to the Ministry of Strategy and Finance.
Their total debt will likely expand to 539 trillion won (US$484 billion) in 2022 from 472 trillion won in 2017, but the finance ministry said an increase in their combined capital base to 346 trillion won from 282 trillion won between 2017 and 2022 will reduce the debt ratio.
Their net profit is also expected to increase to 8.6 trillion won from 6.9 trillion won in 2017, although this year's comparable figure is estimated at 0.7 trillion won.
KEPCO's debt ratio will jump to 136 percent from 101 percent over the 2017-2022 period, while the comparable figure for the housing and land developer LH will see its figure fall to 262 percent from 286 percent.
"The government will make constant efforts to have corporations improve their balance sheets," the ministry said. (Yonhap)