▲ Vice Prime Minister Hong Nam-ki and Minister of Strategy and Finance


The hidden implications of various fiscal indicators that the government announced today (1st) when it announced the next year's budget is that'there is no place for money, but there are so many places to spend.'



In the face of the unprecedented crisis of the Corona 19 outbreak, government income is unprecedentedly bad, but there are so many places where the government has to spend money.



The country's barracks situation (financial balance) deteriorates rapidly.



In Korea, which has a large degree of openness compared to the size of the economy, it is important to look at us from the outside.



This is because it is a structure that can be destroyed by itself if funds are expelled rapidly.



In this sense, there are also many concerns about the pace of financial deterioration.



In next year's budget, the government has chosen the largest expansion budget ever.



Next year's gross income growth rate is only 0.3% slower than this year's estimate (481 trillion won), but total expenditure growth is 8.5% higher than this year's (5123 trillion won).



The total expenditure growth rate minus the gross income growth rate is 8.2 percentage points, the highest ever.



The situation in which the total expenditure (55.58 trillion won next year) exceeds the total income (483 trillion won) continues for the second consecutive year.



It is extremely exceptional that the amount of total expenditure exceeds the gross income, and the growth rate of total expenditure exceeds the growth rate of total income.



This is because, in the face of an unprecedented crisis of the Corona 19 outbreak, tax revenues are extremely sluggish and expenditures increase to the largest ever.




The government forecasts the national tax revenue of 22.8 trillion won next year.



This is 1.1% more than this year's estimate of tax revenue based on the 3rd supplementary correction budget reflecting the largest revenue correction ever recorded (KRW 11.4 trillion, supplementing the estimated tax shortage).



Next year's corporate tax is expected to drop by 8.8% compared to this year (the 3rd supplementary standard) to 53.3 trillion won.



It is calculated that the income tax (89 trillion won) will increase 1.5% compared to this year and the comprehensive real estate tax (5.1 trillion won) will skyrocket 54.0%, which will barely make the national tax income a plus.



There is no money to come in, but there is a lot of money to spend, so the result is a deterioration in the fiscal balance.



The scale of issuance of deficit treasury bonds to make up for the deficit will increase to 89 trillion won, the largest in history.



As a result, next year's national debt will increase to 945 trillion won, well over 900 trillion won.



This is 105.6 trillion won more than the year-end forecast of 839 trillion won.



The ratio of national debt to GDP next year is 46.7%, up 3.2 percentage points from this year.



The fiscal deficit is KRW 10.97 trillion, which is 5.4% of GDP.



The government believes that the impact of the Corona 19 incident on the economy is so great that the country's livelihood will continue to worsen for a considerable period of time.



This means a departure from the existing expected path.



The government believes that from this year to 2024, the growth rate of total revenue will be only 3.5% per year.



In the same period, the growth rate of total expenditure is expected to be 5.7%.



This means further aggravation of the financial situation.



The government estimates that the national debt will surpass 1,000 trillion won for the first time in 2022, with 10.7 trillion won.



In the same year, the national debt-to-GDP ratio was 50.9%, surpassing 50% for the first time.



The managed fiscal deficit relative to GDP peaks at 5.9% in 2022 and 2023, respectively.



The government is in a position that despite the rapid deterioration of the fiscal balance, it was inevitable that the largest scale of fiscal expansion in history was inevitable.



Deputy Prime Minister Hong Nam-ki and Minister of Strategy and Finance said at a preliminary briefing on next year's budget proposal on the 27th, defining next year as the golden time that determines the direction of the Korean economy, and insisting that the role of financing the last bastion for the national and national economy is necessary.



However, it is pointed out that the rate of financial deterioration is too rapid.



For example, the national debt ratio is expected to surpass 50% (50.9%) in 2022, while the national debt ratio has jumped from the late 30% level (37.1%) to 40% this year.



It is expected to reach 60% (58.3%) in 2024.



Last month, Fitch lowered the US's national credit rating outlook from'stable' to'negative'.



A few days before this, Japan also suffered a relegation of its national credit rating outlook.



Unlike those who are the key currency countries, in Korea, if the outlook for sovereign credit ratings deteriorates, it could lead to a large outflow of foreign funds.



Hong Joon-pyo, a research fellow at Hyundai Economic Research Institute, criticized, "Although expansion fiscal is inevitable next year, it is very fast that the national debt ratio will increase from the late 30% to the high 50% in just five years."



Professor Kim Jeong-sik of Yonsei University said, "There is little room for a surge in welfare demand in the future as the welfare system is already in place in developed countries, but if the pension system in Korea is insufficient and the aging progresses, the demand for welfare will increase significantly in the future, further deteriorating financial soundness. "There is."



(Photo = Yonhap News)