Next Year’s $430 billion ‘Super Super Budget’…$50 Billion in Deficit Bonds

2019-8-29, TV Chosun  (translation)

South Korean government budget increases from ₩469 trillion (2019) to ₩513 trillion (2020)

The government has proposed a super budget of ₩513 trillion ($430.7 billion) next year [2020]. This budget may reflect the intention of overcoming the economic difficulty by securing an even larger budget, but this is a liability for the citizens, so it is worrying whether this can be managed.  The government has to issue more debt to do this.

The government’s budget for next year is ₩513.5 trillion ($430.7 billion). It is 9.3% higher than this year’s budget, with an increase of ₩43.9 trillion ($37 billion). The budget has increased in the 9% range each year for two years in a row.

They made the first budget that exceeded ₩500 trillion for next year, which is the election year.

The government explained that it is necessary to have bold financial assistance in consideration of difficult economic conditions such as Japanese export controls.

Hong Nam-gi (홍남기), Deputy Prime Minister for the Economy said, “We put forward the strong will of the government and expanded it as much as possible.”

The problem is funding. Next year’s budget expenditure increased by ₩43.9 trillion ($37 billion), while tax revenue increased by only one-eighth or ₩5.9 trillion ($4.9 billion).

Thus, the government is planning to cover the shortcomings by issuing deficit government bonds worth ₩60.2 trillion ($50 billion) next year, which is an increase of  ₩2.6 trillion (2.2 billion) from this year.

In this case, the national debt-to-GDP ratio, which was 37.1% this year, will reach 40% next year, at 39.8%.

The government predicts that if it does, it will rise to 46.4 percent by 2023.

Professor Sung, Tae-Yoon (성태윤), Yonsei University said, “I think we’ll face a difficult situation in the future by moving at an unmanaged speed.”

Source:  http://news.tvchosun.com/mobile/svc/osmo_news_detail.html?contid=2019082990139