South Korea’s debts topped 1,700 trillion won last year. The current administration’s expansionary fiscal policy led to the worst fiscal soundness in a decade and the government employee and military pension liabilities topped 940 trillion won.
Specifically, the country’s assets and liabilities totaled 2,299.7 trillion won and 1,743.6 trillion won, respectively. The latter increased 3.6 percent from a year ago. The Ministry of Economy and Finance explained that the liabilities increased due to, for example, a 50.9 trillion won increase in outstanding government bonds.
The overall fiscal deficit reached 12 trillion won with the total income and expenditures at 473.1 trillion won and 485.1 trillion won, respectively. It is the first overall fiscal deficit since the global financial crisis of 2008. The deficit is equivalent to 0.6 percent of the country’s 2019 GDP.
The overall fiscal balance excluding social security funds posted a deficit of 54.4 trillion won. The deficit is equivalent to 2.8 percent of the GDP and the ratio is a 10-year high. The ministry ascribed this to fiscal expansion, a slower increase in total income attributable to a sluggish business performance, etc.
The government employee and military pension liabilities edged up 4.3 trillion won year on year to 944.2 trillion won after having shown an annual increase of no less than 100 trillion won or so for the preceding four years. This rapid decline is because the government applied adjusted inflation and wage growth rates. Specifically, the government adjusted the respective figures from 2.1 percent to 2 percent and from 5.3 percent to 3.9 percent, which led to a 96.2 trillion won decrease in pension liabilities.