7.8 Trillion 4th Supplementary Budget Increases This Year's National Debt by 106 Trillion... Debt Equals 43.9% of GDP

Fiscal Management Deficit at 6.1% of GDP... First Ever in the 6% Range

[Image source=Yonhap News]

[Sejong=Asia Economy Reporter Kim Hyunjung] As the government moves to prepare the 4th supplementary budget (supplementary budget) worth 7.8 trillion won to respond to the resurgence of the novel coronavirus infection (COVID-19), this year's national debt is set to surge by more than 106 trillion won compared to last year. The managed fiscal balance deficit is expected to exceed 6% of the gross domestic product (GDP) for the first time in history.

On the morning of the 10th, the government finalized the preparation of the 4th supplementary budget at the 8th Emergency Economic Meeting chaired by President Moon Jae-in, and held an extraordinary Cabinet meeting chaired by Prime Minister Chung in the afternoon to review and approve it.

With the preparation of the 4th supplementary budget, this year's total national revenue will reach 470.7 trillion won, and total expenditure will reach 554.7 trillion won, resulting in an integrated fiscal balance deficit of 84 trillion won, which is 7.8 trillion won higher than when the 3rd supplementary budget was prepared. The integrated fiscal balance deficit is expected to increase from 3.9% to 4.4% of GDP during the same period, a 0.5 percentage point rise.

The managed fiscal balance deficit, which excludes the four major social security funds such as the National Pension and Employment Insurance funds from the integrated fiscal balance to show the government's actual fiscal condition, is expected to reach 118.6 trillion won, equivalent to 6.1% of GDP. This represents a deterioration of 7.1 trillion won and 0.3 percentage points compared to the 3rd supplementary budget, marking the first time the managed fiscal balance deficit ratio has reached the 6% level.

The net increase in national debt is expected to rise from 98.6 trillion won based on the 3rd supplementary budget to 106.1 trillion won. The national debt ratio will increase from 43.5% to 43.9% of GDP. If the Korean economy records negative growth, falling below the government's forecast of 0.1%, the denominator (GDP) used to calculate the debt ratio will decrease, potentially pushing the national debt ratio close to 45%.

This content was produced with the assistance of AI translation services.