It was revealed that the government borrowed over 170 trillion won from the Bank of Korea last year. This is a whopping 47% increase compared to 2023, and is the largest ever since 2011, when related statistics are available. There is an analysis that the tax revenue shortage is serious enough for the government to increase its dependence on the Bank of Korea’s ‘negative account (temporary borrowing)’.
According to data submitted by the Bank of Korea on the 1st to the office of Democratic Party lawmaker Lim Gwang-hyeon, a member of the National Assembly’s Planning and Finance Committee, the government borrowed a total of 173 trillion won from the Bank of Korea on 84 occasions in 2024. The cumulative annual loan volume is the largest ever since 2011, when such statistics were available. It increased by 47% from the previous maximum of 117.6 trillion won in 2023. The number of borrowings was also 20 times more than in 2023 (64 times).
The Bank of Korea’s temporary loan to the government is a temporary measure used by the government to resolve fund shortages that occur due to the time lag between revenues and expenditures. The cumulative annual loan amount increased significantly from KRW 36.5072 trillion in 2019 to KRW 102.913 trillion in 2020, when government spending surged due to the COVID-19 pandemic. It then decreased to 7.613 trillion won in 2021, 34.2 trillion won in 2022, and then showed a sharp increase again to 117.6 trillion won in 2023.
The government borrowed 15.4 trillion won in one-time loans on 10 occasions in October last year alone, and borrowed an additional 5 trillion won by 2.5 trillion won each on December 30 and 31 of last year. Of the 173 trillion won borrowed last year, 1 trillion won has not yet been repaid. Last year, the accumulated interest on loans amounted to 209.2 billion won. This is also the largest ever, significantly exceeding the annual interest amount in 2023 (KRW 150.6 billion).
The increase in government borrowing is interpreted to be because less taxes were collected than expected in 2023 and last year due to poor corporate performance and economic slowdown.
According to the ‘National Tax Revenue Status as of November 2024’ announced by the Ministry of Strategy and Finance on December 31 last year, the cumulative national tax revenue as of November last year was 315.7 trillion won, a decrease of 8.5 trillion won compared to the same period last year. As of November last year, the progress rate against the revenue budget was calculated to be 86.0%. This means that the government only collected about 86% of the expected national tax revenue (367.3 trillion won). Due to poor corporate performance, corporate tax (60.2 trillion won) was collected 17.8 trillion won less than a year ago, which had a significant impact.
Rep. Lim pointed out, “Temporary borrowing is being implemented as a chronic means of large-scale financing due to tax cut policies and economic slowdown.”
Reporter Shin A-hyung [email protected]
Reporter Kim Soo-yeon [email protected]
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