Three Consecutive Years of Deficit... Widened Gap Compared to 2021
Last year, nearly 96 trillion won in deficits occurred in the public sector, including central and local governments and public enterprises, marking the largest deficit ever recorded. Although total revenue increased due to higher tax income such as corporate tax, expenditures, mainly related to COVID-19 health insurance benefits, were greater.
According to the "2022 Public Sector Accounts (Provisional)" released by the Bank of Korea on the 20th, the total revenue of the public sector (general government and public enterprises) last year was 1,104 trillion won, and total expenditure was 1,199.8 trillion won, resulting in a deficit of 95.8 trillion won. This is the largest deficit since the statistics began in 2007.
Total revenue increased by 109.1 trillion won (11%) compared to 2021, while total expenditure rose by 177.6 trillion won (17.4%). As a result, the deficit widened more than threefold compared to 27.3 trillion won in 2021.
By sector, the total revenue of the general government, including central government, local governments, and social security funds, was 843.2 trillion won, an increase of 64.5 trillion won (8.3%) from 778.6 trillion won the previous year. This was due to a significant rise in tax revenues such as corporate tax, income tax, and value-added tax.
On the other hand, total expenditure was 883 trillion won, up 97.7 trillion won (12.4%) from the previous year. The general government's balance showed a deficit of 39.8 trillion won, with the deficit widening by 6.6 trillion won compared to the previous year. This is the largest deficit in two years since the 52.3 trillion won deficit in 2020. The Bank of Korea explained that the increased expenditure was due to "an increase in final consumption expenditure centered on health insurance benefits related to COVID-19 testing and treatment, and an increase in current transfers to affected groups such as small business owners."
The Bank of Korea stated, "Although the central government’s total revenue increased, total expenditure (final consumption expenditure and other current transfers) rose significantly, widening the deficit. The local governments maintained a surplus at the previous year's level, and the social security funds saw a slight decrease in surplus as total expenditure increased more than total revenue."
The total revenue of non-financial public enterprises such as Korea Electric Power Corporation and Korea Land & Housing Corporation increased, mainly driven by energy-related public enterprises, reaching 222.8 trillion won. This is an increase of 32.7 trillion won (17.2%) compared to 190.1 trillion won the previous year.
However, total expenditure of non-financial public enterprises rose by 74.9 trillion won (35.4%) to 286.7 trillion won. The rise in raw material prices such as crude oil and natural gas significantly increased intermediate consumption, leading to higher total expenditure for non-financial public enterprises. Consequently, the deficit of non-financial public enterprises widened significantly to 64 trillion won, compared to 21.8 trillion won the previous year.
The total revenue of financial public enterprises such as Korea Development Bank and Korea Housing Finance Corporation increased by 11.9 trillion won (32.3%) to 48.6 trillion won, while total expenditure rose by 5 trillion won (14.1%) to 40.7 trillion won. As a result, the surplus expanded by 6.9 trillion won to 7.9 trillion won compared to 1 trillion won the previous year. This is the largest surplus recorded since the statistics began in 2007.
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