Last year, the government recorded a consolidated fiscal balance without social security fund deficit of 104.8 trillion won, marking the third largest deficit in history. Although tax revenue fell below the budget, the expenditure was maintained, leading the ratio of the consolidated fiscal balance without social security fund deficit to expand to 4.1% of gross domestic product (GDP). This means that former President Yoon Suk-yeol has once again failed to achieve the fiscal rules he pursued as a national policy agenda.
According to the Ministry of Economy and Finance on the 8th, the government deliberated and approved the '2024 financial statement' at the Cabinet meeting that day. The financial statement will undergo an inspection of settlement by the Board of Audit and Inspection and is scheduled to be submitted to the National Assembly by the end of May.
Last year, the consolidated fiscal balance without social security fund was recorded as a deficit of 104.8 trillion won. This figure represents an increase of 17.8 trillion won compared to the previous year (87 trillion won), with a deficit ratio of 4.1% of GDP. This marks the largest deficit since 2022 (-5.0%).
The consolidated fiscal balance without social security fund is calculated by excluding protective funds such as national pension from the consolidated fiscal balance, showing the government’s real fiscal status. Last year's deficit amount was the third largest after 2020 (-112 trillion won) and 2022 (-117 trillion won).
The consolidated fiscal balance recorded a deficit of 43.5 trillion won, widening by 6.7 trillion won from the previous year (36.8 trillion won). The fiscal deficit is attributed to the decline in tax revenue. Last year's total revenue was 594.5 trillion won, 17.7 trillion won less than the budget, and national tax revenue was limited to 336.5 trillion won, a decrease of 7.5 trillion won from the previous year. The significant drop in corporate tax revenue, which fell by 17.9 trillion won, had a major impact.
The government explained that despite the economic slowdown, it maintained expenditure related to welfare for the vulnerable and other livelihoods. Last year's total expenditure was 638 trillion won, an increase of 27.3 trillion won compared to the previous year, but it was 18.6 trillion won less than the budget. This was affected by adjustments to the grant-in-aid (non-earmarked tax) due to the decrease in national tax revenue.
A Ministry of Economy and Finance official noted, 'Despite the difficult revenue conditions, we maintained fiscal expenditure directly related to livelihoods,' adding, 'It was a structure that we had no choice but to maintain a certain level of expansion until the economic recovery takes hold.'
The fiscal rules were not adhered to for two consecutive years. Former President Yoon had set the target of maintaining the consolidated fiscal balance without social security fund deficit ratio within 3% of GDP. However, following 2023 (-3.9%), the goal was exceeded again last year.
Last year, government debt reached 1,175.2 trillion won, an increase of 48.5 trillion won compared to the previous year, marking the highest level ever. However, due to GDP growth, the ratio decreased slightly to 46.1%, down from 46.9% the previous year. Government debt refers to the financial obligations the state bears due to the issuance of bonds and borrowing funds, which indicates the debts that the country must repay immediately.
The surplus, known as the world surplus, after subtracting expenditures from revenues, was 2 trillion won, of which the general account world surplus (400 billion won) is expected to be used for grants to the Public Fund Repayment Fund and debt repayments.