Hwaseong City Reduces Debt Ratio from 24.9% to 13.3%

Among local governments in Gyeonggi Province facing financial difficulties due to economic downturn, Hwaseong City is showing signs of rapidly emerging from the crisis.

According to Hwaseong City on the 29th, the city's debt, which stood at 238.7 billion won at the launch of the fifth term of the popularly elected government in 2010, has decreased to 178.7 billion won as of September this year, with the debt ratio significantly lowering from 24.9% to 13.3%.

The city explained that although it faced financial difficulties with a revenue deficit of 160 billion won in 2010, it was able to secure fiscal soundness through intensive self-help efforts including reductions in expenditure budgets, discovery of additional revenue sources, sales of public assets, and adjustment of schedules for major investment projects, along with transparent and fair financial management.

Additionally, in conjunction with debt repayment, the city fully paid approximately 46 billion won in development impact charges attributable to Gyeonggi Province, which were required to be paid according to the Board of Audit and Inspection's audit results in December 2011.

Furthermore, the city set the basic direction for the 2014 budget compilation as maintaining fiscal soundness through early repayment of local government debt via selective concentration and focus.

To this end, the city strengthened debt and current expense management in preparation for revenue decreases resulting from the abolition of special fiscal transfer funds, and compiled the budget through early debt repayment situation management, current expense reduction, settlement of citizen participation budget systems, minimization of carryover and unused budgets for balanced execution. The city prioritized citizen welfare projects to address citizen inconveniences and established financial management principles including gender-sensitive budget compilation, performance-oriented financial operation, and strengthened budget support management for subsidiary organizations and entities.

In particular, apart from suppressing large-scale new SOC projects, the city plans to carefully review all projects from the ground up and minimize budget reflection of unnecessary expenses, thereby implementing expenditure structure adjustments that can enhance operational efficiency of available budgets.

The city decided to use the budget secured through these measures primarily for debt repayment, aiming to reduce the debt ratio to 10% or below as of the end of 2014.

A city official stated, "With the revision of the Local Finance Act Enforcement Decree, the special fiscal transfer fund has been abolished, resulting in significant expected financial losses, and the city faces very difficult conditions including the debt of the urban development corporation and financial burdens from Dongtan 2 New City development," and added, "We will eliminate budget waste factors such as 2.4 billion won in current expense reductions through the second supplementary budget, maintain a restraint in issuing new local government debt, and continue efforts for early repayment to reduce interest burdens."

The official further added, "By reducing debt, we have secured funds to invest in citizen benefit projects, enabling us to focus on resolving daily civil complaints that cause inconvenience to citizens' lives."