Jeonnam Gwangju Unified City said on the 19th that "the former Gwangju City's debt is not being repaid by separately cutting the former South Jeolla Province's budget on the grounds of unification." The comment countered concerns that, after the administrative merger, the past fiscal burden of the Gwangju area could be shifted to South Jeolla.
Jeonnam Gwangju City issued a news release the same day, saying, "We will repay the existing debt without delay according to the original repayment plan, and manage the unified finances stably by expanding revenue and improving expenditure efficiency."
According to Jeonnam Gwangju City, the former Gwangju City's debt is repaid according to the annual repayment plan established at the time of issuing local government bonds. Accordingly, the repayment schedule is not moved up because of the unification, nor is there a structure of separately cutting the former South Jeolla Province's budget to pay it back.
As of the 2025 settlement of account, Jeonnam Gwangju City's total gross debt is 3.6514 trillion won. The former South Jeolla Province accounts for 1.4261 trillion won, and the former Gwangju City accounts for 2.2253 trillion won. The debt ratio, which was 25.61% for the former Gwangju City before the merger, fell to 16.25% on a consolidated basis after the merger.
Jeonnam Gwangju City said, "The former Gwangju City's debt increased as it responded to essential spending needs such as social welfare demand, statutory and mandatory expenses, and large-scale investment projects, even as revenue fell due to a slump in the real estate market and an economic slowdown from 2023 to 2025," adding, "We will systematically manage the purposes of issuance, balances, and annual repayments of the existing debt."
Jeonnam Gwangju City also said it will form a task force for fiscal innovation to comprehensively review securing national funds and unified finance incentives, restructuring expenditure, and next year's fiscal conditions, and to prepare responses for each sector.
In addition, it plans to bolster its own revenue by strengthening local government tax collection and delinquency management, while continuously urging the government and political circles to expand national fiscal support, including raising the statutory rate of the grant-in-aid (non-earmarked tax).
Separately, Jeonnam Gwangju City will limit new local government bonds to large-scale essential projects. Funds secured through revenue expansion and expenditure efficiency will be used to repay principal and to prepay high-interest local government bonds, lowering debt and interest burdens.
Lee Deok, Jeonnam Gwangju City's budget chief, said, "With increased grants thanks to a buoyant semiconductor industry next year and the full-scale injection of 5 trillion won a year in unified support funds, investment capacity will also expand," adding, "We will maintain fiscal soundness without cutting the former South Jeolla Province's agriculture, fisheries, welfare, and social overhead capital (SOC) budgets, and we will also disclose the debt status and repayment performance transparently."