Ministry of the Interior and Safety Promotes Strengthening Financial Soundness of Local Public Institutions

Holding Meetings of Local Governments and Related Committees

The Ministry of the Interior and Safety announced on the 7th that at the ‘2023 1st Local Public Enterprise Policy Committee’ held at the Government Seoul Office Building, it reported on institution-specific financial and debt management plans, asset stabilization plans, and welfare maintenance plans to strengthen the financial soundness of local public institutions.

This plan is part of follow-up measures according to the 'Local Public Institution Innovation Guidelines' announced in September last year, and is an innovation plan submitted by local public institutions in consultation with the establishing local governments to the Ministry of the Interior and Safety regarding the three major tasks in the financial soundness sector.

Looking more specifically at the financial and debt management plans, the Ministry of the Interior and Safety has annually designated and operated institutions with debt scales exceeding 100 billion KRW and debt ratios over 200% as debt-focused management institutions.

According to the submitted financial and debt management plan (2022?2026), by the end of 2026, local public corporations are expected to see an increase in debt scale and debt ratio due to continued operating deficits caused by public housing construction in the third phase of new towns in the metropolitan area, supply of rental housing, and low fares of urban railway corporations, as well as investments in the improvement of aging facilities. Accordingly, the Ministry plans to manage financial soundness appropriately by recommending adjustments to project schedules excluding essential projects such as national policy projects and minimizing new bond issuance so that the debt scale and debt ratio of local public corporations do not increase sharply.

Along with this, as part of the asset stabilization maintenance plan, a maintenance plan worth a total of 662.8 billion KRW, including the sale of non-core real estate, was submitted. Additionally, welfare maintenance plans were autonomously submitted by 356 local public institutions covering 19 items such as retirement bonuses and a total of 991 cases.

The Ministry of the Interior and Safety plans to cooperate with local governments to steadily implement the innovation plan in the financial soundness sector of local public institutions according to the maintenance schedule.

Choi Byung-kwan, Director of the Local Finance and Economy Office at the Ministry of the Interior and Safety, stated, “In a situation where domestic and international economic conditions are uncertain, a rapid increase in debt scale raises financial risks for local public institutions, ultimately causing burdens on local finances and residents,” and added, “We will strengthen management and supervision of institutions with increasing debt scales to ensure the financial soundness of local public institutions.”