NABO Medium-Term Fiscal Projection : 2022~2031

Published on Oct., 31. 2022
Published by Estimates & Tax Coordination Division

   The government submitted its “FY 2023 Budget Proposal” to the National Assembly on September 2, aiming for “Transition of fiscal management towards fiscal soundness.”
   In this budget, total revenues are 625.9 trillion won and total expenditures are 639.0 trillion won. Compared with the 2022 supplementary budget, total revenue increased by 2.8% and total expenditure decreased by 6.0%. The “2022~2026 National Fiscal Management Plans” turned in to the National Assembly alongside the budget proposal indicate that the fiscal balance (excluding social security funds) to GDP ratio is projected to remain in the 2% range in 2023-2026, while the national debt to GDP ratio is forecast to come in at 52.5% in 2026.
   The National Assembly Budget Office, in its “NABO Medium-Term Fiscal Projection: 2022~2031” report, after taking into account the policy changes reflected in the government’s budget proposal and the national fiscal management plans, made fiscal projections regarding aggregate total expenditures over the next ten years, which include total revenues, total expenditures, fiscal balance, and national debt.
   The projection, reflecting major policy changes, indicates that total revenues are expected to increase from 623.2 trillion won (28.7% of GDP) in 2022 to 857.6 trillion won (28.0% of GDP) in 2031, at an average annual growth rate of 3.6%, while total expenditures are expected to increase from 691.8 trillion won (31.9% of GDP) in 2022 to 907.6 trillion won (29.7% of GDP) in 2031, at an average annual growth rate of 3.1%. The consolidated fiscal balance relative to GDP is projected to drop from △3.2% in 2022 to △1.6% in 2031, while the fiscal balance excluding social security funds relative to GDP is expected to decline from △5.4% of GDP in 2022 to △2.5% in 2031. National debt is expected to rise from 1,068.8 trillion won (49.3% of GDP) in 2022 to 1,789.6 trillion won (58.5% of GDP) in 2031, at an average annual growth rate of 5.9%.
   The NABO fiscal projection indicates that a national fiscal scenario similar to what the government envisioned is likely to be realized; however, plans to cut discretionary spending must be implemented in a faithful manner for the government's intended transition to fiscal soundness to be realized.