Increased Welfare Spending to Drive Fiscal Debt Sky-High
19 October, 2019
If the government pushes ahead with its expanded welfare spending plans, Korea's fiscal debt will rise W360 trillion above the government's original target by 2028 (US$1=W1,181).
According to an estimate by the National Assembly Budget Office on Thursday, Korea's fiscal debt will reach W1,491 trillion by 2028, while the government debt ratio will reach 56.7 percent of GDP.
Just last year, the office estimated Korea's fiscal debt at W1,130 trillion by 2028 or 48 percent of GDP. But within less than a year, the projection has risen a whopping 31.9 percent and the government debt ratio 8.7 percentage points.
The new estimates reflect the government's 2019-2023 budget plans, next year's fiscal expenditure plans and recent economic factors.
The government informed the National Assembly last month that it will boost fiscal spending by nine percent next year following a similar increase this year, while raising welfare spending by 8.9 percent on average per year until 2023.
The slow economy has caused tax revenues to decline, while the government wants to spend more on pork-barrel policies.
Cho Dong-geun at Myongji University said, "Welfare policies aimed at winning votes are casting a long shadow over the future of Korea when the economy is already losing steam. The government is committing a serious offense against future generations."
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