South Korea has seen the largest and fastest increase in total national liabilities last year, as it neared the 2,000 trillion won ($1.78 trillion) mark and exceeded the country’s gross domestic product for the first time, the Finance Ministry said Tuesday.

The total liabilities reached 1,985.3 trillion won ($1.76 trillion) in 2020, up 241.6 trillion won, or 13.8 percent, from a year earlier, according to the 2020 settlement of accounts endorsed by the Cabinet.

The figure is a record high for the country since it adopted the International Financial Reporting Standards in 2011 to better align its accounting practices with those used by countries in the global market.

The figure exceeds the 2020 nominal GDP of Asia’s fourth-largest economy which was estimated at 1,924 trillion won.

The national debt, in which central and provincial governments must repay, came in to a record 846.9 trillion won as of end-December, up 123.7 trillion won from the previous year.

The amount translates to about 16.34 million won in debt per capita for the country with a population of 51.8 million.

According to the ministry, the national debt to GDP ratio stood at 44 percent, up 6.3 percentage points from a year ago.

The rapid upswing is largely due to state debt raised by treasury bonds to support expansionary fiscal spending including four rounds of relief handouts aimed at containing the fallout of the COVID-19 pandemic.

The consolidated fiscal account posted a deficit of 71.2 trillion won, widening by 59.2 trillion won from a year ago as the government increased spending to revitalize the coronavirus-hit economy amid a falling tax revenue.

The new figures come as the government decided to keep its expansionary fiscal policy stance next year to support economic recovery amid concerns over the country’s fiscal soundness due to mounting national debt.

“The fiscal health of South Korea is in relatively good shape as major economies are expected to see large deficits due to expansionary spending in response to the COVID-19 pandemic,” Kang Seung-joon, head of the Fiscal Management Bureau of the Finance Ministry, said during a press briefing.

In January, the IMF projected the average overall deficits as a share of GDP in 2020 are projected at -13.3 percent for advanced economies. The figure for South Korea stands at -3.1 percent.

Earlier, the ministry said it would focus on making fiscal inputs on boosting employment and domestic consumption and bolstering investment in innovative technologies, while strengthening efforts to restructure fiscal expenditures.

Lee In-ho, an economics professor at Seoul National University, said the government should take a careful approach when mapping out expansionary fiscal policy.

“Although the government says issuance of treasury bonds won’t cost much because of low rates and says there won’t be a tax hike to finance the debt. The national debt should be repaid sooner or later by us or the next generation,” Lee said.

The settlement report will be submitted to the National Assembly by the end of May after a review by the state audit agency.

By Park Han-na (hnpark@heraldcorp.com)