A report has emerged predicting that South Korea's national debt will exceed 7000 trillion won in 47 years.
According to the National Assembly Budget Office's 'long-term fiscal outlook from 2025 to 2072' released on the 23rd, the National Assembly Budget Office forecasts that the government debt will reach 7303 trillion 6000 won by 2072. This is 5.7 times the current level (1270 trillion 4000 won), with an average annual increase rate of 3.8%. This figure is based on the assumption that current laws and systems remain intact and that the population will be 36.22 million in 2072.
The National Assembly Budget Office predicted that the GDP growth rate would decline from 2.2% this year to 0.3% by 2072. It noted, "As GDP does not increase, government debt will rise rapidly as the National Pension Fund becomes depleted in 2057."
The ratio of government debt to GDP is expected to rise rapidly from 47.8% this year to 80.3% in 2040, 107.7% in 2050, 136% in 2060, and 173% in 2072. This suggests that by 2050, even if all goods produced in South Korea are liquidated, the government debt cannot be repaid.
Total revenue is expected to increase at an average annual rate of 0.8%, rising from 650 trillion 6000 won (24.5% of GDP) this year to 930 trillion 2000 won (22.0% of GDP) in 2072. The National Assembly Budget Office attributed this to the slowing increase of social security contributions due to demographic changes and the decline in operational income following the reduction of funds like the National Pension.
Total expenditure is projected to grow at an average annual rate of 1.6%, increasing from 676 trillion 3000 won (25.5% of GDP) this year to 1418 trillion 5000 won (33.6% of GDP) by 2072. This increase is attributed to the rise in the number of public pension beneficiaries and welfare expenditures due to aging.
The scale of the consolidated fiscal balance deficit, calculated by subtracting total expenditure from total revenue, is projected to expand from 25 trillion 7000 won (−1.0% of GDP) this year to 488 trillion 3000 won (−11.6% of GDP) in 2072. The management fiscal balance deficit, which excludes the social security fund from the consolidated fiscal balance, is expected to grow from 85 trillion 5000 won (−3.2% of GDP) this year to 270 trillion 7000 won (−6.4% of GDP) in 2072.
The National Assembly Budget Office projected that the cumulative reserve of the National Pension Fund would peak in 2039, turn to a deficit in 2040, and be depleted by 2057. The fund for private school teachers is expected to peak in 2027, switch to a deficit the following year, and be exhausted by 2042.
According to the National Assembly Budget Office, by 2072, the cumulative fiscal balance deficit of the National Pension will amount to 60.9% of GDP (2,899 trillion 4000 won), while the deficit of the private school pension will reach 2.4% of GDP (128 trillion 9000 won).
The National Assembly Budget Office noted, "The fiscal balance deficit after the depletion of the National Pension Fund and the private school pension fund is a significant risk factor for national finances," adding that "there is a need to discuss measures to secure fiscal sustainability."
However, the National Assembly Budget Office analyzed that if the population decreases less than expected in the future, the ratio of government debt to GDP could decrease by about 10 percentage points. According to the National Assembly Budget Office, if the population in 2072 is 6.6 million more than the projection (36.22 million), the government debt ratio is expected to drop by 9.7 percentage points to 163.2%. On the other hand, if the population is 6.05 million less than the projection, at 30.17 million, the government debt ratio is expected to increase by 9.0 percentage points to 181.9%.
The National Assembly Budget Office stated, "Last year's total fertility rate was provisionally counted at 0.75, higher than the median analysis assumption of 0.68. However, if this trend continues in isolation, there are concerns that the government debt ratio may rise," and emphasized the need for policy efforts to at least maintain a median level of demographic structure.
It analyzed, "If the government cannot continuously control the level of expenditure, government debt will increase," noting that "if discretionary expenditures grow at a high rate, the government debt ratio could reach 176.6% by 2072, which is 3.7 percentage points higher, indicating the necessity of ongoing expenditure control."