Budget Increase Boosts National Debt
The International Monetary Fund (IMF) said in its Fiscal Monitor report that the ratio of the South Korean central government’s fiscal income to South Korea’s GDP for next year is estimated at 24.6 percent and this level is the third-lowest in the group of 35 developed countries behind those of Hong Kong (21 percent) and Singapore (21.1 percent).
According to the IMF, the 35 countries’ average fiscal income ratio for next year is estimated at 36.6 percent and that of G7 countries is estimated at 36.2 percent. The IMF also said that those ratios are likely to reach 36.8 percent and 36.6 percent in 2024, respectively.
On the other hand, South Korea’s fiscal income ratio is forecast to fall to 24.4 percent in 2022 to 2024 with its fiscal income conditions deteriorating. This is contrary to the South Korean government’s recent announcement. It recently said that its national tax revenue would rebound down the road after falling for the first time in 10 years in 2020.
The government is proceeding with its expansionary fiscal policy and concerns are rising over its fiscal management. South Korea’s fiscal expenditure-to-GDP ratio is estimated to rise from 23.1 percent to 23.7 percent from 2020 to 2024 whereas the developed countries are expected to maintain theirs at 38.8 percent during the period. The South Korean government recently boosted its annual budget to 514 trillion won and the real national debt to be borne by each person has increased 17.7 percent to 7,667,000 won.