The national debt reached 2196 trillion won in the twin deficits, which overlapped the deficit and the trade deficit.
The trade balance in March was a deficit of 140 million dollars (170.4 billion won), and it returned from a surplus of 831 million dollars in February to a consecutive deficit in December of last year (426 million dollars) and this January (4.73 billion dollars). back to a loss streak.
According to the National Settlement Report at the end of last year, the national debt was 219.6 trillion won in the financial statements, a sharp increase of 214.7 trillion won (10.8%) from the previous year's 1981.7 trillion won.
The fiscal balance passed by the State Council on the 5th is a deficit of 30.4 trillion won with total revenue of 570.5 trillion won and total expenditure of 600.9 trillion won.
The managed fiscal deficit, excluding the social security fund, was 90.5 trillion won in the consolidated fiscal balance, and the proportions of the consolidated fiscal deficit and the managed fiscal deficit as a percentage of the gross domestic product (GDP) were 1.5% and 4.4%, respectively.
The consolidated fiscal balance has been in the red for three consecutive years since 2019 from a surplus of 31.2 trillion won in 2018, and the managed fiscal deficit has been in the red for the 14th consecutive year since 2008.
The increase in total revenue of 524.2 trillion won in fiscal 2021 compared to the previous year by 58.7 trillion won was supported by a surge in real estate tax revenues such as property tax, which led to a 58.5 trillion won increase in national tax revenue from the previous year to 344.1 trillion won.
Prime Minister nominee Han Deok-soo said, “The idea that we should maintain the balance of payments surplus at a certain level is the idea that when this becomes unstable, the possibility of a currency crisis is much greater for us. The recent rise in energy prices, including crude oil, due to geopolitical issues is causing us a deficit in the balance of payments in the short term. We have to closely examine it and try to maintain a certain portion of the balance of payments surplus,” he said in a statement on the 4th.
Regarding the deterioration of the current account, the National Assembly planning office said, "The increase in the issuance of government bonds in the fiscal deficit may increase the interest rate, thereby increasing the loan interest burden of households and companies, and may lead to a decrease in consumption and investment." "The expansion of the current account deficit is Not only does it increase the won-dollar exchange rate, but it also affects external credibility, which can lead to difficulties in raising foreign funds for domestic companies,” he published a report on the 29th of last month.
The report said, “As the total expenditure in the Moon Jae-in administration’s ‘extended fiscal’ increased significantly, the fiscal deficit widened year by year. It has not yet escaped from the fiscal deficit due to the impact of expansionary fiscal spending, which could adversely affect the current account until 2024, two years later,” he said.
Through the relationship between the fiscal balance and current account of Keynes's 'twin deficit hypothesis', the report states, “With the expansionary fiscal policy, fiscal spending and the issuance of government bonds increase, market interest rates rise, and foreign capital that responds to changes in domestic and foreign interest rates increases domestically. The won increases in value, which in the short term increases imports and increases export unit prices, which adversely affects the current account,” he said.
The BOK governor nominee Chang-yong Lee previously suggested maintaining the Japanese-style low interest rate (tolerating interest rate reversal with the US), but Japan's low interest rate was applied to the low-inflation policy by controlling inflation through the trade surplus.
Reagannomics, which fell into twin deficits due to increased arms supply and hard-line remuneration, followed domestic riots and international wars, followed by a financial crisis.
Administrative fiscal deficit, national finance, national debt, national tax revenue, trade deficit, twin deficit, foreign exchange crisis, fiscal deficit, taxation on tax, Deoksoo Han