[Title Page]
Contents
I. Introduction 11
II. Status and Main Issues of Local Debt and Local Public Enterprises 14
1. Status of Intergovernmental Fiscal Relations and Liabilities 14
A. Status of Intergovernmental Fiscal Relations 14
B. Status of Intergovernmental Liabilities 16
2. Status of Local Liabilities 18
A. Status of Local Liabilities 18
B. Scale and Trend of Changes in Local Debt by Item 21
C. Local Debt with a Nature of Capital Account 26
D. Level of Local Debt by Region 27
3. Status of Local Public Enterprises 30
A. Changes in Establishment and Composition of Local Public Enterprises 30
B. Status of Establishment of Local Public Enterprises by Type in 2013 32
C. Budgets and Assets Status of Local Public Enterprises 35
D. Status of Liabilities of Local Public Enterprises 38
E. Overview of Liabilities of Local Public Enterprises by Region 42
4. Status of Urban Development Corporations 47
A. SH Corporation 50
B. Gyeonggi Urban Innovation Corporation 51
C. Incheon Development & Tourism Corporation 52
D. Gangwondo Development Corporation 54
E. Status and Problems of Urban Development Corporations under Lower-level Local Governments 55
F. Relationship between Liability Ratio and Financial Indicator of Urban Development Corporations 57
G. Sub-conclusion 61
5. Major Issues and Grounds for Discussion 64
III. Empirical Analysis 71
1. Analysis on Determinants for Liability of Urban Development Corporations 71
A. Research Data and Analysis Model 72
B. Basic Data Analysis and Analytical Method 75
C. Hypothesis and Analysis Results 77
2. Analysis on Determinants of Local Debts 81
IV. Conclusion and Policy Direction of Local Public Enterprises and Local Debt 83
1. Improvement Plan for Local Debt 83
A. Vitalization of Local Bond Market vs. Linkage to Finance Management Plan 83
B. Lack of Debt Management System at a Local Government Level 85
C. Improvement Focused on the Institutional Viewpoint: Separate Management of Capital Expenditure 86
D. Redefining the Scope of Local Debt 87
2. Measures to Reduce Local Public Corporation Liabilities and Relevant Institutions 88
A. Liability Reduction Plan According to the Nature of Urban Development Corporation Liabilities 89
B. Liability Reduction Plan Based on Reorganization of Structure or Nature of Business 89
C. Reduction Plan for Urban Development Corporation Liability Ratio from the Institutional Perspective 90
D. Strengthening Conditions for Establishing Public Corporations: Reorganizing Governance 91
E. Building a Long-term Management System for Public Corporations: Need for Stable Provision of Public Services 94
3. Conclusion and Policy Implications 96
References 101
〈Table II-1〉 Ratio of National-to-Local Budget 15
〈Table II-2〉 Ratio of National-to-Local Fiscal Spending(in total) 15
〈Table II-3〉 Amount of Local Debt by Year(based on net revenue budget) 16
〈Table II-4〉 Status of Intergovernmental Debt/Liabilities in 2012 17
〈Table II-5〉 Local Government Bonds by Issuance Method and by Fund in 2012 19
〈Table II-6〉 Amount and Proportion of Local Government Debt by Project in 2011 19
〈Table II-7〉 Trend of Changes in the Central and Local Government Debt 20
〈Table II-8〉 Debt/Net Debt of Local Governments per Year 21
〈Table II-9〉 Debt with/without Payment Resource 22
〈Table II-10〉 Changes in Local Debt Redemption 23
〈Table II-11〉 Issuance-to-Ceiling Ratio of Local Debt in 2011 23
〈Table II-12〉 Local Debt of Upper-and-Lower Level Governments 24
〈Table II-13〉 Debt-to-Budget Ratio of Local Governments by Type in 2008 25
〈Table II-14〉 Debt-to-Budget Ratio of Local Governments by Type in 2012 25
〈Table II-15〉 Maturity Term Structure of Local Debt 26
〈Table II-16〉 Status of Local Government Bonds at End of December 2012 29
〈Table II-17〉 Management Type of Local Public Enterprises 31
〈Table II-18〉 Establishment Status of Local Public Enterprises by Year 32
〈Table II-19〉 Results of Settlement of Accounts of Local Public Enterprises in... 39
〈Table II-20〉 Liability Size of Public Enterprises by Year 40
〈Table II-21〉 Liability Ratio of Public Enterprises by Region 44
〈Table II-22〉 Liability Size of Public Enterprises by Local Government in 2012 45
〈Table II-23〉 Liability and Equity Size and Debt Liability Ratio of Urban... 47
〈Table III-1〉 Characteristics of Liability of Local Public Enterprises by Type 71
〈Table III-2〉 Descriptive Statistics for Analysis Data 76
〈Table III-3〉 Empirical Analysis Results on Determinants for Liability Ratio of... 78
〈Table IV-1〉 Monitoring Standards for Local Governments 91
〈Table IV-2〉 Comparison of National Public Organizations and Local Public... 92
〈Table IV-3〉 Average Annual Increase Rate of Liability of Water Supply and... 95
[Figure II-1] Changes in the Amount of Accumulated Local Debt per Year 20
[Figure II-2] Sub-central government capital expenditure as a percentage of GDP in... 27
[Figure II-3] Debt Growth by Local Government in 2012 Compared to 2000 28
[Figure II-4] Debt Ratio and Fiscal... 29
[Figure II-5] Debt Ratio and Local... 29
[Figure II-6] Budget Size of Local Public Enterprises by Type... 36
[Figure II-7] Asset Size of Local Public Enterprises by Type... 37
[Figure II-8] Capital Size of Local Public Enterprises by Type... 38
[Figure II-9] Changes in Liabilities by Year 38
[Figure II-10] Financial Status of Local... 38
[Figure II-11] Liability Size of Local Public Enterprises... 41
[Figure II-12] Net Profit of Current Period of Local Public Enterprises by Type... 42
[Figure II-13] Liability Size of Local Public Enterprises by Region(2011-2012) 43
[Figure II-14] Debt Ratios of Local Governments and Liability Ratios of Local... 45
[Figure II-15] Debt Ratios of Local Governments and Liability Ratios of Local... 46
[Figure II-16] Liability Ratio of Local Governments and Local Public Enterprises... 46
[Figure II-17] Status of Liabilities of Urban Development Corporations 49
[Figure II-18] Financial Status of SH Corporation in Seoul 51
[Figure II-19] Financial Status of Gyeonggi Urban Innovation Corporation 52
[Figure II-20] Financial Status of Incheon Development & Tourism Corporation 53
[Figure II-21] Financial Status of Gangwondo Development Corporation 55
[Figure II-22] Liability Ratio, Sales,... 58
[Figure II-23] liability Ratio, Sales, Current... 58
[Figure II-24] Changes of Debt Ratio and... 59
[Figure II-25] Changes of Debt Ratio and... 59
[Figure II-26] Debt Ratio and Change Rate... 60
[Figure II-27] Debt Ratio and Change Rate... 60
[Figure II-28] Debt Ratio and Change Rate... 60
[Figure II-29] Debt ratio and Change Rate... 60
[Figure II-30] Correlation between Debt Ratio of Local Governments and Liability... 65
[Figure II-31] Local Tax Burden and... 66
[Figure II-32] Local Tax Burden and... 66
[Figure II-33] Proportion of Transfer... 66
[Figure II-34] Proportion of Transfer... 66
[Figure II-35] GRDP and Liability Ratio... 68
[Figure II-36] GRDP and Local Debt Ratio 68
[Figure II-37] Liability ratio of Local... 69
[Figure II-38] Local Liability Ratio and... 69
[Figure II-39] Liability Ratios of Water Supply and Urban Development Corporations 70