[2019 National Settlement] National Debt Snowball... Surpasses 1,700 Trillion Won for the First Time in History

Government Reviews and Approves '2019 Fiscal Year National Settlement of Accounts'

Kang Seung-jun, Director General of Fiscal Management at the Ministry of Economy and Finance (center), is presenting the key points at the briefing on the "2019 Fiscal Year National Settlement Results" held at the Sejong Government Complex on the 6th.

[Sejong=Asia Economy Reporter Lee Kwang-ho] The management fiscal balance, a representative indicator showing the government's fiscal soundness, recorded a deficit of 54.4 trillion won last year, marking the largest deficit ever. The deficit ratio also reached the highest level in 10 years. National debt approached 1,750 trillion won. Concerns are growing that the country's finances will worsen further this year due to the supplementary budget for responding to the novel coronavirus disease (COVID-19) and populist pledges from the political sphere.

On the 7th, the government held a Cabinet meeting presided over by Prime Minister Chung Sye-kyun at the Government Complex Sejong, where the '2019 Fiscal Year National Settlement' containing these details was reviewed and approved.

The scale of debt on the financial statements, based on the timing of expenditures, increased by 50.2 trillion won (3.6%) compared to the previous year, reaching 1,743.6 trillion won. Confirmed debt increased by 51.2 trillion won due to the issuance of government bonds, and pension liabilities, which are the future pension payments the government must make to public officials and military personnel, increased by 4.3 trillion won.

The fiscal balance deteriorated to a record level. The integrated fiscal balance, which is total revenue minus total expenditure, worsened by 43.2 trillion won from the previous year, turning into a deficit of 12 trillion won. The deficit scale is the largest since 2009 (-17.6 trillion won), right after the global financial crisis. The management fiscal balance, which excludes the four major social security funds from the integrated fiscal balance to show the government's actual fiscal condition, showed a deficit of 54.4 trillion won. This is the largest scale since statistics began in the 1990s. The deficit expanded by 43.8 trillion won compared to the previous year. The deficit ratio relative to the gross domestic product (GDP) is the highest in 10 years since 2009 (3.6%).

National debt, composed of central and local government debts, increased by 48.3 trillion won from the previous year to 728.8 trillion won, surpassing 700 trillion won for the first time in history. The ratio to GDP reached 36.5%. Dividing the national debt by the total population last year (51.709 million) as compiled by Statistics Korea, the per capita debt is about 14.09 million won, increasing by approximately 930,000 won from the previous year. Professor Sung Tae-yoon of Yonsei University emphasized, "The pace of fiscal deficit and national debt increase is becoming too rapid," and stressed, "It is urgent to establish fiscal rules to control this."

Meanwhile, total revenue including general and special accounts last year was 402 trillion won, total expenditure was 397.3 trillion won, resulting in a settlement surplus of 4.7 trillion won. Excluding the amount carried over to the next fiscal year from the settlement surplus, the world surplus was 2.1 trillion won. The government will submit the national settlement report to the National Assembly by the end of May after the Board of Audit and Inspection's settlement audit.