State liabilities surpass W1,550 tril.
State liabilities soared to a record high 1,550 trillion won ($1.5 trillion) last year, on snowballing future government and military pension payments as well as increasing issuance of government bonds. The debt of the central and provincial governments also increased 33.8 trillion won.
According to the finance ministry, state liabilities recorded in the consolidated financial statement stood at 1555.8 trillion won last year, up 122.7 trillion won from the previous year. This includes 845 trillion won in liabilities to provide pensions for government workers and soldiers for the future. The pension liabilities have been rising steeply, from 596.3 trillion won in 2013.
Though the 845 trillion won is just an estimated debt on the balance sheet showing how much should be paid out in pensions for the next decade, taxpayers still have to make up for the deficit if the pension fund fails to meet the payments. Trillions of won from taxpayer money have already been spent each year as the contribution to the pension fund by government workers is falling short of the pensions paid to retirees. Government workers' pensions recorded a 2.2 trillion won deficit in 2016 and the military pension saw a 1.6 trillion won deficit, leading to concerns that the funds will be depleted.
As the Moon Jae-in administration plans to hire 174,000 civil workers by 2022, the burden is only likely to snowball.
The state assets, meanwhile, totaled 2063.2 trillion won, marking only a 96.4 trillion won increase from the previous year.
Government debt, which counts the debt of both central and provincial governments, stood at 660.7 trillion won, up 33.8 trillion won from a year ago. This means each Korean shouldered around 12.8 million won of the debt.
The ratio of government debt plus debt of non-profit public institutions to gross domestic product (GDP), which is used for international comparison, was estimated to be around 45 percent, still far lower than the average 112.7 percent of the Organization for Economic Cooperation and Development (OECD) member countries. The ministry said it reflects fiscal soundness.
The tax revenue totaled 359.5 trillion won last year, while expenditures were 342.9 trillion won. However, the outlook on tax revenue is not so rosy, due to the aging population. The central bank estimated in a report that tax revenues excluding consumption tax will dip to 123 trillion won in 2065 from 170 trillion won in 2015 due to the population aging. Tax expenditures, meanwhile, will increase steeply due to social welfare costs.
The ministry also unveiled guidelines for 2019 budget planning. The government will be focusing on job creation for young people, pulling up the birth rate, encouraging innovative growth, and enhancing security in setting up the budget.
"Budget spending will reflect social value. The government will take expansionary budget policy," said Koo Yun-cheol, director in charge of the budget at the finance ministry.
"On top of quantitative growth, budget spending will aim at enhancing quality of life, based on awareness over balance between regions, social community, and public goods," Koo added.
Based on the guidelines, each ministry will hand in their 2019 budget plan to the finance ministry by May 25. The finance ministry will submit the 2019 budget plan to the National Assembly by Sept. 2.
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|Publication:||The Korea Times News (Seoul, Korea)|
|Date:||Mar 26, 2018|
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