Tens of trillions of dollars in deficit in the 4th year of living in the country… All-out war to maintain the government’s ‘additional budget of 14 trillion won’

The first warning light after writing the consolidated fiscal balance

68.1 trillion in deficit expected in supplementary budget
It is difficult to reduce spending due to corona
Politicians “expansion of supplementary budget” government “original plan”

Since 1970, the deficit exceeds 10 trillion won three times
Losses likely to continue until at least 2025

In the new year, as the suffering of the common people is increasing due to inflation and interest rate hikes, it is certain that even the national economy will record a deficit of tens of trillions of won for four consecutive years until this year. The amount of money the government spends is more than the money the government collects for taxes. This is the first time since 1970, when ‘Household Account Book’ was written in the same way as it is now. What’s even bigger is that this trend is predicted to continue until at least 2025. Nevertheless, politicians ahead of the presidential election are insisting on increasing the size of the supplementary budget to ’35 trillion won’ (along with the Democratic Party) or ’50 trillion won’ (the power of the people). While the ’14 trillion won’ supplementary budget bill is being submitted to the National Assembly on the 24th, the Ministry of Strategy and Finance is expected to make an all-out effort to maintain the size of the original bill.

According to the Ministry of Strategy and Finance on the 23rd, this year’s consolidated fiscal balance is expected to result in a loss of 68.1 trillion won. The consolidated fiscal balance is the government’s total revenue minus total expenditure, and it is the same as a country’s household book. The deficit is in the tens of trillions of won for four consecutive years following 2019 (-12 trillion won) and 2020 (-71.2 trillion won) and last year. In the case of last year, the counting has not been finished yet, and it has posted a deficit of 22.4 trillion won by November, and it is expected to increase even more if the amount for December is included.

Since 1970, when the consolidated fiscal balance was compiled, there have been only three times of double-digit trillion-dollar deficits except for the last four years. 1997 (18.8 trillion won) and 1998 (-13.1 trillion won) during the financial crisis, and 2009 (17.6 trillion won) right after the global financial crisis. For the time being, a deficit of tens of trillions of won in national living becomes the ‘new normal’. According to the ‘2021-25 National Fiscal Management’ announced by the Ministry of Strategy and Finance last year, it will be in the range of 60 trillion won to 2023 (-64.5 trillion won), 2024 (-69.4 trillion won) and 2025 (-72.6 trillion won), respectively. It is expected to record a loss of 70 trillion won. This is because the country’s livelihood, which has greatly increased due to COVID-19, cannot be easily reduced, and there are many places that need to be used due to the accelerating aging of the population.

In the case of this year, when the main budget was drawn up, the consolidated fiscal balance was expected to suffer a loss of 54.1 trillion won. However, as the 14 trillion won supplementary budget was decided, the deficit also increased to 68.1 trillion won. The government is expected to try to maintain the total size of 14 trillion won by reducing other areas such as the reserve budget (1 trillion won), even if some increases are made in the amount of support for small businesses (9.6 trillion won) during the National Assembly’s review of the supplementary budget plan.

Deputy Prime Minister and Minister of Economy and Finance Hong Nam-ki said at a briefing shortly after the Cabinet meeting that decided on the supplementary budget on the 21st, “I expect that the scale and contents of the government’s supplementary budget will be respected as much as possible (in the National Assembly).”

Reporter Sejong Lim Joo-hyung