Unlocking Billions: How Foreign Investment and Housing Funds Can Bridge the $30 Trillion Tax Revenue Gap

◀ Anchor ▶

With the tax revenue shortfall expected to approach 30 trillion won this year, the government announced a plan to make up for this shortfall.

As with last year, we decided to make the best use of surplus funds, including foreign exchange funds, and also reduce local finances.

This is reporter Park Cheol-hyeon.

◀ Report ▶

The Ministry of Strategy and Finance reported its fiscal response plan following this year’s tax revenue re-estimates in a comprehensive audit of government affairs today.

This is a concrete plan on how to make up for the tax revenue deficit, which is expected to reach 29.6 trillion won this year.

The government plans to use its own available resources, such as funds and unused resources, without taking on debt, such as by issuing government bonds.

The funds and special accounts used to address the tax revenue shortfall are in the range of 14 trillion won to 16 trillion won.

The largest of these is the foreign exchange fund, which is expected to be invested with 4 to 6 trillion won.

The Foreign Exchange Fund plays the role of stabilizing the exchange rate by buying and selling dollars or won when the exchange rate fluctuates sharply.

Last year, when there was a large tax revenue deficit, about 20 trillion won was invested in the foreign exchange fund.

The government announced that it would not consider investing in foreign exchange funds this year, but the Ministry of Strategy and Finance explained, “We had no choice but to mobilize foreign exchange funds to minimize the decrease in local financial resources.”

In addition, we will also invest approximately 4 trillion won in the public fund management fund carried over from last year, approximately 2 to 3 trillion won in surplus resources from the housing and urban fund created through subscription bank account payments, and 300 billion won in the national property management fund.

Local allocation taxes and education financial grants, which are paid in proportion to domestic taxes, are effectively reduced by suspending the execution of about 6.5 trillion won.

The Ministry of Strategy and Finance said, “We will discover additional available financial resources through inspection of fund balances, etc.”

If up to 16 trillion won of funds are used for fiscal expenditures according to the response plan, a deterioration in the management fiscal balance, which shows the government’s actual livelihood, appears inevitable.

This is Park Cheol-hyeon from MBC News.

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