S. Korea’s national debt hits record high in 2023

South Korea's national debt reached a fresh high last year, and the debt-to-gross domestic product (GDP) surpassed 50 percent for the first time ever, the finance ministry said Thursday. The sovereign debt, which covers bond sales and financial borrowing by central and provincial governments, amounted to 1,126.7 trillion won (US$826.63 billion) in 2023, up 59.4 trillion won from a year earlier, according to the report on the national settlement for last year presented by the Ministry of Economy and Finance. Of the total, debt incurred by the central government went up 59.1 trillion won to 1,092.5 trillion won, while that of provincial governments was presumed to have increased 300 billion won to 34.2 trillion won. The record amount came despite the government's belt-tightening policy measures following expansionary fiscal spending over the past several years amid the COVID-19 pandemic. The amount of debt has risen at a fast pace recently, from around 723.2 trillion won in 2019 to 846.6 trillion won in 202 0, 970.7 trillion won in 2021 and further to 1,067.4 trillion won in 2022. The debt-to-GDP ratio also rose to an all-time high of 50.4 percent in 2023, up from 49.4 percent in 2022. It was the first time that the ratio hovered over 50 percent since the government began compiling relevant data in 1982. The settlement report, approved by the Cabinet on Thursday, will be submitted to the National Assembly after a review by the state audit agency. This image, provided by Yonhap News TV, depicts the national debt. (PHOTO NOT FOR SALE) (Yonhap) In 2023, total revenue sank 13.4 percent on-year in 2023 to come to 497 trillion won due mainly to a 51.9 trillion-won decline in tax revenue amid an economic slowdown. Expenditures also fell 12.4 percent to 490.4 trillion won. The consolidated fiscal balance, a key gauge of fiscal health, logged a deficit of 36.8 trillion won last year, narrowing from a shortfall of 64.6 trillion won in 2022. The managed fiscal balance, a measure of fiscal soundness calculated after excluding the balance of social safety funds, also posted a deficit of 87 trillion won in 2023. Last year's figure was improved from a shortfall of 117 trillion won in 2022, but the deficit in the managed fiscal balance came to 3.9 percent of the GDP in 2023, higher than the 2.6 percent forecast in the yearly budget bill. "Despite the sharp decline in tax revenue, the government actively used financial tools to help people's livelihoods recover and to boost economic momentum," a ministry official said. The Yoon Suk Yeol administration has vowed to maintain the managed fiscal deficit within 3 percent of GDP and curtail it to within 2 percent if the government debt-to-GDP ratio surpasses 60 percent. But experts say it seems far from easy for the government to achieve the goal at an early date as the country has seen weak domestic demand amid high inflation, as well as such longer-term challenges as the low birth rate and population aging that require budget spending. Source: Yonhap News Agency