The government has reportedly demanded that Korea Land and Housing Corp. pay out 120 billion won in dividends, or roughly 10 percent of the corporation’s 2012 net profit. The corporation is set to make a decision when its board members meet, as scheduled, on March 22.

But the corporation, better known as LH Corp., has no other choice than to comply as it is state-owned. Still, the government’s demand leaves those familiar with LH Corp.’s finances scratching their head. They cannot be blamed if they wonder aloud how come the government demands a dividend payment from one of its corporations that is burdened with an astronomical amount of debt.

At the end of last year, LH Corp.’s debt was at 138.1 trillion won, up 7.5 trillion won from a year earlier. Its sheer size is nothing but alarming.

It is worthwhile to compare the amount with the total national debt, 445.9 trillion won, if it is to be put in proper perspective. In other words, the amount of one single state-owned corporation is nearing one-third of Korea’s national debt.

Were the government’s policymakers in their right mind when they decided to demand a dividend payment from LH Corp.? Wasn’t amortization supposed to be the first thing they should have demanded of the corporation, given that the corporation’s interest payment was enormous ― 10 billion won on average each day?

Moreover, the government reneged on its promise when it demanded a dividend payment. When LH Corp.’s ballooning debt made headlines last year, the prime minister’s office, together with the ministries concerned, promised to waive its dividend payment this year.

Who should be held accountable for the huge debt? Some of the successive top managers may be blamed for mismanagement. But it is ultimately the government that must hold itself accountable, given that the corporation launches land development and housing projects on its behalf.

Most culpable in this regard is former President Lee Myung-bak’s administration. The corporation heavily borrowed to finance the Lee administration’s big-ticket projects, ranging from the building of rental homes for low-income families to the construction of Sejong City as a new administrative town. What was enticing to the Lee administration was that the debt raised to finance the projects did not appear as a liability on the government’s books, making it easier for the administration to pursue a fiscal balance.

For a similar reason, a large portion of Lee’s 22 trillion won project for the restoration of the four major rivers in the nation was handed over to Korea Water Resources Corp. As a result, its debt has increased 20 percent during the past three years.

Another state-owned corporation is hemorrhaging, though for a different reason. Korea Electric Power Corp. has had to provide electricity below cost, as it was not allowed to raise the price. The Lee administration put the electricity price under its tight control in a policy of pushing down the consumer price index. No wonder, the utility has sustained operating losses since 2008.

Debt is growing alarmingly fast for state-owned corporations. In 2011, for instance, it increased 11.8 percent, even faster than the 7.2 percent for the national debt. The soaring debt is posing a threat to the nation’s financial stability.

When the corporate debt is put together with the national debt, the total sum, which is categorized into a public-sector debt, is equal to almost two-thirds of the nation’s gross domestic product, according to a report from the Korea Institute of Public Finance.

For a better management of the public-sector debt, the government has decided to follow the IMF/OECD compiling guideline. It is set to put together the national debt and the debt of the state-owned corporations and make the combined sum public in March 2014 for the first time.

The change in the compiling of the public-sector debt alone will not be enough. Strict regulations must be placed on big-ticket projects that any of the state-owned corporations is set to launch on its own or on commission from the government.

For instance, the government could be stricter in its demand for preliminary feasibility studies on big-ticket project to be launched by state-owned corporations. Few could say the government did a good job if no such study was conducted on 127 of the 161, as was the case, in 2011.

More important, President Park Geun-hye’s administration will have to keep itself from commissioning its own projects to state-owned enterprises as frequently as its predecessor did.