20 trillion won annual deficit seen through 2016

Korea will post about 20 trillion won ($18.2 billion) in fiscal deficit every year until 2016, a parliamentary office said yesterday, casting doubt over the government’s push to achieve a balanced budget in a couple of years.

According to data provided by the National Assembly Budget Office, Korea will post about 18.5 trillion won in fiscal deficit next year, far higher than the government’s deficit forecast of 4.8 trillion won.

The larger-than-expected shortfalls come mainly from the office’s worry that it would be tough to sell stakes in state banks next year, which would result in less revenue than the government earlier projected.

It is also based on less optimistic views of the country’s economic growth by the parliamentary office, which would result in less tax revenue. It expected 3.5 percent growth for 2013, lower than the government’s 4 percent growth outlook.

The office predicted that the government’s gross revenue will grow at an annual average of 5 percent between 2012 and 2016, while its gross expenditure is expected to expand 4.9 percent. As a result, its fiscal deficit will amount to about 20 trillion won every year, it said.

The government, meanwhile, said that its revenue and expenditure will grow 6 percent and 4.6 percent, respectively. Under the assumption, it predicted that it can achieve a balanced budget starting in 2014 when it spends within its means.

The two also showed differences in their respective forecasts of the national debt.

The government earlier predicted that the national debt will grow 2.3 percent every year between 2012 and 2016 to amount to 487.5 trillion won at the end of the projected year. The parliamentary office expected that the debt will increase at an annual average rate of 7 percent to total 591.8 trillion won by 2016.

Yonhap