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South Korea launched a broad range of reform programs on Wednesday to overhaul chronic lax management practices among public agencies, which saw their debts exceed sovereign debts.
"To push for the reform plan effectively, the government placed its focus on building a pan-governmental reform mechanism to reduce public agencies' debts and overhaul their chronic lax management," Finance Minister Hyun Oh-seok, who briefed reporters about the policy package, said on Wednesday.
The reform plan came amid growing concerns over massive debts of public agencies related with the central and municipal governments. Their debts were 493 trillion won (470 billion U.S. dollars) as of end-2012, surpassing 446 trillion won of sovereign debts.
To pull down the massive debts, 12 public agencies were listed as priority control targets. The list included Korea Electric Power Corp (KEPCO) and the Korea Land and Housing (LH), which accounted for nearly half of the total public agency debt.
The other 20 public agencies were named as major control targets to curb their excessive benefit packages and bonus as well as lax management.
Hyun said that those targeted agencies would be subject to interim assessment in the third quarter of 2014, noting that head of the underperformed agencies will be punished severely.
From the long-term perspective, the government aimed to reduce the debt-to-equity ratio of public agencies to 200 percent in 2017 from the current 220 percent through those reform measures.
