Last Year, Public Sector Deficit of 35.7 Trillion Won... Public Enterprises' Spending Soars

Reduced Deficit Compared to 2020
Non-Financial Public Enterprises' Deficit Increases Due to Rising Raw Material Costs

On the morning of the 21st of last month, citizens visiting the screening clinic at Songpa-gu Public Health Center in Seoul are waiting for their turn for testing. [Image source=Yonhap News]

It was revealed that the public sector recorded a deficit of nearly 36 trillion won last year. Although total revenue increased due to higher tax income such as corporate tax, expenditures exceeded revenue due to COVID-19 support funds and rising raw material prices.

According to the "2021 Public Sector Accounts (Provisional)" released by the Bank of Korea on the 15th, the total revenue of the public sector (general government and public enterprises) last year was 986.6 trillion won, and total expenditure was 1,022.3 trillion won, resulting in a deficit of 35.7 trillion won.

Total revenue increased by 97.6 trillion won (11.0%) compared to 2020, and total expenditure rose by 74.9 trillion won (7.9%). Accordingly, the deficit narrowed compared to 58.4 trillion won in 2020.

By sector, the total revenue of the general government, including the central government, local governments, and social security funds, was 771.6 trillion won, an increase of 83.8 trillion won (12.2%) from the previous year. This was due to continued growth in social contribution income such as national pension and a significant increase in tax revenue including corporate tax.

On the other hand, total expenditure was 787.1 trillion won, up 47.1 trillion won (6.4%) year-on-year. The general government's balance showed a deficit of 15.6 trillion won, narrowing from 52.3 trillion won the previous year.

The Bank of Korea explained, "The central government recorded high levels of expenditure due to COVID-19 prevention measures following the previous year, but the deficit narrowed as tax revenue increased significantly," and "local governments turned to a surplus as total revenue increased more than total expenditure."

Total revenue of non-financial public enterprises such as Korea Electric Power Corporation and Korea Land & Housing Corporation increased mainly in energy-related public enterprises, reaching 190.1 trillion won. This was an increase of 17.1 trillion won (9.9%) compared to the previous year.

However, total expenditure of non-financial public enterprises rose by 30.9 trillion won (17.1%) to 211.1 trillion won. This was due to a significant increase in intermediate consumption caused by rising raw material prices such as international oil prices.

Accordingly, the balance of non-financial public enterprises showed a deficit of 21 trillion won, significantly increasing from 7.2 trillion won the previous year.

Total revenue of financial public enterprises such as Korea Development Bank and Korea Housing Finance Corporation was 36.2 trillion won, down 800 billion won (2.2%), and total expenditure decreased by 600 billion won (1.6%) to 35.3 trillion won.

The financial public enterprises maintained a surplus of 900 billion won, similar to last year's 1.1 trillion won.

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