Government debt exceeds 2 trillion won for the first time

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Government officials, including those from the Ministry of Finance, brief on the 2021 financial statements, including income and expenditure, in Sejong on April 4. [YONHAP]

Last year, government debt topped 2 trillion won ($1.65 trillion) for the first time as spending surged to fight the pandemic.

The increase in public service payments due to the increase in hiring also weighed on the budget.

Korea’s financial statements for 2021 showed national liabilities rose 10.8 percent to 2,196.4 trillion won, according to information released at a cabinet meeting.

Liabilities include government bonds and contingent liabilities, such as provisions for civil servants’ pensions.

Pension provisions are not present obligations but forecasts of what is due over decades as government employees retire.

Current debt, including government bonds in 2021, stood at 818.2 trillion won, up 14%.

The government cited the two supplementary budgets as adding to the liability. The debt created by the supplementary budgets amounted to almost 50 trillion won.

Total debt, including pension payments and local government bonds, was 967.2 trillion won, up 14%.

Last year, unconfirmed liabilities were 1.378 trillion won, up 9%. Of these liabilities, public pension liabilities amounted to 1,138.2 trillion won.

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Moon Jae-in’s government has spent heavily on a number of projects, including those related to revenue-led growth and hiring in public agencies. Covid-19 has also contributed to this.

Total liabilities were 1,433.1 trillion won at the end of 2016, and at the end of 2019, it was 1,743.7 trillion won.

Last year, the debt-to-GDP ratio was 47%, up 3.2 percentage points from 2020. It is up 11 percentage points from 2016.

With the first supplementary budget this year, government debt is expected to exceed 1 trillion won and the debt-to-GDP ratio by 50%.

Last year, the government announced a deficit of 30.4 trillion won. In 2020, the deficit was 71.2 trillion won.

“We were able to significantly reduce the deficit,” said Kang Wan-koo, head of the Budget Management Office at the Ministry of Finance.

In 2021, government revenue – mainly taxes – was 570.5 trillion won, up 19.2%. The government collected 344.1 trillion won in taxes alone, up 20.5 percent.

Total spending reached 600.9 trillion won, up 9.3%.

BY LEE HO-JEONG [[email protected]]

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