SEOUL, July 14 (Yonhap) — South Korea’s budget deficit rose 22.7 trillion won ($17.4 billion) in the first five months of this year from a year ago, largely due to increased government spending aimed at fighting the pandemic, data showed on Thursday.
The managed fiscal balance, a key indicator of fiscal health calculated over a tighter timeframe, posted a deficit of 71.2 trillion won in the January-May period, higher than a deficit of 48.5 trillion won a year. earlier, according to the Ministry of Finance.
The larger deficit came as the government compensated traders affected by the pandemic and increased spending under the record 62 trillion won supplementary budget created in May.
The government expects the budget deficit to reach 110.8 trillion won this year.
Central government debt stood at 1.018.8 trillion won at the end of May, up 17.8 trillion won from the previous month. This debt surpassed the 1 trillion won mark for the first time in April.
President Yoon Suk-yeol’s new government plans to implement an austerity policy after years of expansionary fiscal policies adopted by the previous Moon Jae-in administration in an effort to improve fiscal health.
To that end, the country plans to reduce the budget deficit to a size equivalent to less than 3% of gross domestic product (GDP) over the next five years from the 5.1% estimate for this year.
The government has also set a target to reduce the debt-to-GDP ratio to around “the midpoint” of the 50% range by 2027. The estimated debt ratio for 2022 stands at 49, 7%.
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