NABO Fiscal Trends & Issues (Inaugural Issue)
April 21, 2017
I. Major Fiscal Indicators
By the end of February, the government took in 17.7% of the total annual projected revenue for 2017 and made 17.3% of its total annual projected expenditures. As a result of the general rise in total revenue, the consolidated fiscal balance shifted by 6.1 trillion won year-on-year to a surplus of 4.0 trillion won. The central government's total debt, nevertheless, increased by 19.4 trillion won to 611.3 trillion due to redemption of maturing treasury bonds and other such reasons.
Ⅱ. Fiscal Legislation
Among the bills passed in the National Assembly during the first quarter of 2017 were 30 bills with budget estimations. For the five years from 2018, the additional fiscal requirement of these bills totals 47.3 trillion won. Some of the key bills with fiscal requirements that were passed include amendments to the National Health Insurance Act and National Health Promotion Act (passed March 30, 2017) which allow the national treasury and the National Health Promotion fund to extend their period of support for health insurance; as well as amendments to the Restriction of Special Taxation Act (passed March 30, 2017) which reinforce tax incentives intended to boost job creation.
Ⅲ. Key Fiscal Issues
The fiscal issues of the first quarter of 2017 include the temporary Act on the Special Accounts for Early Childhood Education Support for the Nuri Curriculum, the establishment of two new funds (International Fund against Diseases and Fund for Compensation for Damages caused by Automobile Accidents), reform of the health insurance contribution structure, which is expected to reduce the financial burden on low-income regional subscribers, and the 2017 performance evaluation of special taxation. Additional initiatives of fiscal policy that were introduced include improvement of the management of major programs, increased government investment in seismic reinforcement of public facilities, increased investment in basic research with focus on the researchers and reduction of fine particulate matter.
Ⅳ. External Fiscal Trends
The budgets plans of major countries such as the US, UK, Germany, Japan, and France for fiscal years 2017 and 2018 generally aim for fiscal balance improvement by increasing fiscal revenues and reducing fiscal expenditures. The Korean government’s fiscal and debt volumes are lower than those of other major countries, but its debt is increasing at a relatively higher rate.