National Debt Reaches Historic Highs, Prompting Concerns

The 2023 fiscal year national accounts report has revealed a national debt of $816.7B with a fiscal deficit of $63B

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On the 11th, the government reviewed and approved the 2023 fiscal year national accounts report. According to the report, last year’s national debt reached a record high of $816.7 billion.

The fiscal deficit, a vital indicator of the country’s financial health, is $63 billion. This figure, nearly $22 billion higher than initially projected, came as a shock.

The fiscal balance, excluding social security funds such as the national pension and employment insurance from the government’s integrated fiscal balance (total income – total expenditure), is a crucial gauge of the government’s fiscal health.

This fiscal deficit decreased by $22 billion from 2022 but exceeded the projected $42.2 billion by $21 billion during budget formulation.

The fiscal deficit ratio to the Gross Domestic Product (GDP) stood at 3.9%. President Yoon Suk Yeol had previously pledged to limit the fiscal deficit to within 3% of the GDP annually, a target that was not achieved.

The cause was analyzed as a lack of corporate tax revenue and decreased income tax due to a sluggish real estate market.

According to the report, last year’s total tax revenue amounted to $424 billion, marking a decrease of $66 billion compared to the previous year’s settlement.

The national tax revenue of $294 billion, collected as taxes, decreased by $44 billion from the previous year. Income tax decreased by $11 billion, corporate tax by $20 billion, value-added tax by $7 billion, and individual consumption tax by $362 million.

Total expenditure was $418 billion, a decrease of $59 billion from the previous year.

The integrated fiscal balance, the total income (total tax revenue + fund income) minus total expenditure, also recorded a deficit of $31 billion.

The national debt of $960 billion also increased the debt per capita.

As of January this year, with a population of 51.23 million, the national debt per person amounts to $18,700, an increase of $1,020 from 2022.

This represents a significant rise from the $10,350 in 2016, the beginning of the Moon Jae In administration.

Some have raised concerns that with the current low birthrate trend, the population will continue to decrease, exacerbating the seriousness of the debt burden issue as the national debt increases.

Meanwhile, the release of this year’s national accounts report faced an unusually delayed announcement.

According to the National Finance Act, the government must approve the previous year’s national accounts report in the State Council by April 10th each year and submit it to the Board of Audit and Inspection of Korea.

The announcement was postponed to the next day because the 10th was the 22nd general election, a public holiday.

This decision was criticized, with some suggesting it was made with the upcoming general election in mind. There is suspicion that authorities feared the deficit record could have a negative impact on the election outcomes.