Ignoring the Water Crisis, Focused on Money Distribution

Nation's Treasury Emergency... First Half Deficit of -111 Trillion Won and Accelerating Increase

[Asia Economy Reporter Kwangho Lee] The government's treasury is in an emergency because there is no incoming money, but it only thinks about spending. Although the intention is to revitalize the Korean economy, which has fallen into recession due to the impact of the novel coronavirus infection (COVID-19), there are criticisms that the government is recklessly considering expenditures without regard to the tax revenue cliff. As a result, the 'debt' that future generations will have to repay is piling up like a mountain.

According to the 'Monthly Fiscal Trends August Issue' published by the Ministry of Economy and Finance on the 11th, the national debt (based on the central government) at the end of June was 764.1 trillion won, a sharp increase of 65.1 trillion won compared to the same period last year. Compared to the end of last year, it increased by 65 trillion won.

According to the 'National Debt Clock' posted on the website by the National Assembly Budget Office to raise awareness about the national debt, the national debt burden per Korean citizen has exceeded 15.4 million won. Compared to about 10 years ago in 2009, when it was 7.23 million won, it has more than doubled. The national debt also surpassed 798 trillion won, more than doubling compared to 2009 (36 trillion won).

The problem is that the speed at which the national debt is increasing is accelerating every year. It surpassed 100 trillion won in 2000, 200 trillion won in 2004, 300 trillion won in 2008, 400 trillion won in 2011, 500 trillion won in 2014, 600 trillion won in 2016, and 700 trillion won in 2019, respectively.

The government has projected that the national debt will reach 839.4 trillion won this year with the 3rd supplementary budget. It is expected to increase to 935.3 trillion won in 2021 and to surpass 1,030.5 trillion won (48.9% of GDP) in 2022, the last year of President Moon Jae-in's term.

Voices expressing concern for the 'future' are growing louder. Assemblyman Choo Kyung-ho of the United Future Party pointed out, "If fiscal populism runs wild like a runaway colt, future generations may face the worst outcomes such as national default or a massive tax bomb." A former head of the National Assembly Budget Office criticized, "It is irresponsible for the ruling party and government to say that the national debt and the rapid increase in the national debt ratio are acceptable," adding, "At the very least, honest public persuasion is needed, saying 'It could reach a serious level, but for now, fiscal expansion is inevitable.'"

Professor Kim Woo-cheol of the Department of Taxation at the University of Seoul, regarding the August issue of Fiscal Trends, forecasted, "Since the nominal growth rate is declining, it is not easy to be optimistic about additional tax revenues coming in the second half of the year."