Concern grows over cities in the red

Concerns have been growing over the financial health of local governments here following Monday’s declaration by Seongnam City of a moratorium on its debts. Seongnam, one of the wealthiest cities in the nation, became the first municipal government to default on its debt. 

The city in Gyeonggi Province owes 520 billion won ($432 million) to the Land & Housing Corporation and the Ministry of Land, Transport and Maritime Affairs for its new town project in the Pangyo district. 

“Considering the city’s current financial situation, it is impossible to repay the money in a short period or at once,” Mayor Lee Jae-myung said at a press conference.

The National Assembly Budget Office reported Tuesday that the total budget deficit of local governments amounted to 7.1 trillion won last year. 

The portion of their self-reliant revenue sources, including regional taxes and non-tax receipts, made up 52.2 percent on average, a 1.4 percent decrease from 2008.

The new office building is cited as one of the reasons for the financial difficulties of Seongnam City, which announced a moratorium on its debt Monday. Kim Myung-sub/The Korea Herald