this paper examines the current status and problems of the government-guaranted public fund, which was borrowed to buy out the nonperforming bonds from banking sectors during the IMF economic crisis in korea. it looks at the exact size of the public fund, which is not redeemable by the banks of companies so that the government has to repay. it examines critically the government's intended policy of repaying such government-guaranteed debt. finally it suggests alternative policies to repay such debt.