Ministry of Strategy and Finance
The scale of national debt has soared to 1985 trillion won last year in the aftermath of the expansion of finances to overcome the Corona 19 crisis. The administrative fiscal balance, representing the country’s livelihood, was 112 trillion won, a record-high deficit.
State debt is a concept that is calculated by adding the present value of the pension amount that the state should pay in the future, such as civil servants and military pensions, to the debts of the central and local governments (national debt). It can be viewed as a debt in the broader sense that combines potential debts in the present and future.
The government explained that “the coronavirus was inevitable due to the coronavirus outbreak,” but concerns about the country’s fiscal soundness continue as there are structural factors such as low birthrate and aging population.
The Ministry of Strategy and Finance announced at a state council meeting on the 6th that it had deliberated and decided on a national settlement report for fiscal year 2020. In the future, it is expected to be submitted to the National Assembly in May after going through an audit of the accounts of the Board of Audit and Inspection.
Last year, debt in the national financial statements was 1985.300 trillion won, a sharp increase of 24.46 trillion won from a year ago. The government’s four additional amendments (additional) budgets have been put in place, which has a huge impact on the expansion of finances.
Last year, the amount of fixed debt, which was determined when and how much should be paid back, increased by 111.6 trillion won. This is because the government organized the additional budget (67 trillion won) four times, including three times to pay disaster support, and took more government bonds for this purpose.
Last year, unconfirmed debt increased by 130 trillion won. Non-determined debt refers to debt for which the timing and amount of payment have not been determined, such as money to be given pensions to public officials and military personnel in the future (pension provision debt). The pension provision is an estimate of expenditures without taking into account future pension income.
Last year, the pension provision was 1044 trillion won, an increase of 10 trillion won in one year. It was the first time it exceeded 1,000 trillion won.
The Ministry of Science and Technology explained that “the main reason is that the discount rate used to calculate the present value has decreased due to the recent low interest rate.”
Unlike national debt, which includes’possibly incurred costs’, national debt, which is based solely on the debts that the central and local governments must pay, was 84.89 trillion won, an increase of 122.3 trillion won from a year ago. Both the scale and the growth rate are the largest ever.
Last year, the national debt was 44% of GDP, a 6.3 percentage point higher than a year ago (37.7%). It increased slightly from the level expected (43.9%) when the supplementary budget was formulated last year. This is the first time that the national debt has exceeded 800 trillion won. The national debt exceeded 400 trillion won in 2011, 500 trillion won in 2014, 600 trillion won in 2016, and 700 trillion won in 2019.
The consolidated fiscal balance (total income-total expenditure) recorded a deficit of 71.2 trillion won. Compared to a year ago, the deficit increased by 5,920 trillion won. The administrative fiscal balance, which was calculated after subtracting the four major security funds, including the National Pension, was 112 trillion won in deficit. This is the largest since the statistics were made in 1990.
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View other articles by reporter Ki-dong Lee
Head of the Seoul Journalism Headquarters. He is in charge of the Blue House and the National Assembly.