The South Korean government is preparing for its smallest-ever increase in annual expenditure for the 2024 budget, signaling President Yoon Suk Yeol’s commitment to maintaining tight fiscal policy. The Ministry of Economy and Finance unveiled the 2024 new budget bill on Tuesday, proposing a modest 2.8% rise in government spending, totaling 656.900 trillion won ($495.26 billion).
If approved by lawmakers, this would mark the smallest percentage increase in the budget since the collection of relevant fiscal data began in 2005, according to the ministry. Since President Yoon’s administration took office in 2022, efforts have been made to improve the nation’s fiscal health, which was allegedly undermined by the preceding liberal government.
Compared to an average annual increase of 8.7% over the past five years until 2022, the national budget for 2023 under Yoon saw a more conservative growth of 5.1%, as reported by the ministry.
Despite the challenges ahead, the ministry stated that under the 2024 budget bill, it would steadfastly maintain its sound fiscal policy stance without wavering. It anticipates a decrease in tax revenue for 2024 due to an economic slowdown and a cooling domestic property market.
The ministry also projected an expansion in the government’s fiscal deficit, estimating it to reach 3.9% of the gross domestic product in 2024, compared to an expected 2.6% in 2023. Moreover, the national debt-to-GDP ratio is forecasted to rise to 51.0% next year from an estimated 50.4% for this year.
In conclusion, South Korea’s 2024 budget proposes a record-low increase in expenditure, highlighting President Yoon’s commitment to maintaining a strong fiscal policy despite economic challenges.
