South Korea’s national debt exceeded $823.15 billion (1,100 trillion won) by the end of August, a development punctuated by a simultaneous contraction in the fiscal deficit, as indicated by recent data from the ROK Ministry of Economy and Finance. This increased debt exceeds the government’s own annual forecast.
Meanwhile, the government’s revenue exhibited a year-on-year decline of about $33 billion (44.2 trillion won). Instrumental to this downturn was a 16.5% reduction in tax revenue, aggregating $180.8 billion (241.6 trillion won). Concurrently, a reduction in government spending by $47.5 billion (63.5 trillion won) correlates with curtailed spending on pandemic-contingent subsidies and projects.
Why It Matters
South Korea’s escalated national debt and the decrease in tax revenue will likely solidify President Yoon Suk-yeol’s commitment to his conservative economic agenda, underscoring the urgency for fiscal restraint. Yoon will also likely attribute the record-breaking national debt to former President Moon Jae-in’s fiscal policies, which Prime Minister Han Duck-soo described in September as “irresponsible.” Yoon will likely position his fiscal conservatism as a necessary corrective to prior economic policies.
While Yoon’s conservative fiscal philosophy, illustrated by the modest increase in the 2024 budget proposal, is aimed at curbing national debt and instilling fiscal discipline, it also raises questions about potential impacts on domestic investment and key sectors such as research and development. Politically, as the nation approaches the parliamentary elections in April, Yoon’s fiscal conservatism is likely to be a double-edged sword. While it might resonate with voters who favor fiscal responsibility, it also exposes the administration to scrutiny, particularly from those who argue that the stringent budgeting approach risks neglecting investment in key sectors poised for future growth and potentially underfund essential social welfare initiatives.
South Korea’s national debt exceeded $823.15 billion (1,100 trillion won) by the end of August, a development punctuated by a simultaneous contraction in the fiscal deficit, as indicated by recent data from the ROK Ministry of Economy and Finance. This increased debt exceeds the government’s own annual forecast.
Meanwhile, the government’s revenue exhibited a year-on-year decline of about $33 billion (44.2 trillion won). Instrumental to this downturn was a 16.5% reduction in tax revenue, aggregating $180.8 billion (241.6 trillion won). Concurrently, a reduction in government spending by $47.5 billion (63.5 trillion won) correlates with curtailed spending on pandemic-contingent subsidies and projects.
Get 30 days
of free access to
KoreaPro
Full access to all analysis
The KOREA PRO newsletter, every business day
Daily analysis on the top story of the day
The ability to suggest topics for coverage by our specialist team
Be smart about South Korea
Get full access to expert analysis and opinion.
Start now
No charges during your trial. Cancel anytime. A paid subscription will start after 30 days.