SEJONG -- The nation is projected to see the fiscal deficit sharply increase this year in the wake of allocation of the supplementary budget worth 16.9 trillion won ($14 billion), state data showed Monday.

In addition, there is a possibility that the fiscal deficit will further increase, as two major presidential candidates have pledged to draw up new supplementary budgets amid growing uncertainty over the economy due to external factors as well as the ongoing pandemic.

According to the Ministry of Economy and Finance, the fiscal balance is likely to post 70.8 trillion won in deficit this year. This is a fall of 16.7 trillion won, compared to regular budget of 54.1 trillion won in deficit.

Data indicates that state expenditure has expanded, though the state revenue showed meager growth, suggesting worsening fiscal soundness.

As result, the ratio of fiscal deficit to the gross domestic product is expected to reach 3.3 percent, while the projected figure before drawing the supplementary budget was 2.5 percent.

At this pace, the 2022 fiscal deficit could be comparable to the record-high of 71.2 trillion won, recorded in 2020, when COVID-19 severely hit the nation.

The Finance Ministry had initially planned 14 trillion won in the extra budget. But the figure has increased to 16.9 trillion won while going through National Assembly‘s assessment before the bill was put to vote.

The issue surrounding South Korea’s fiscal soundness is likely to be reignited after the March 9 presidential election.

Lee Jae-myung, candidate from the ruling Democratic Party of Korea, has vowed to allocate another round of supplementary budget worth 50 trillion won, if elected. He promised to compensate sufficient losses of microbusinesses and the self-employed.

Yoon Suk-yeol, candidate from the main opposition People Power Party, also pledged to release 50 trillion won in the form of a supplementary budget. He promised to offer state funds up to 10 million won per microbusiness.

Under the scenario of 50 trillion won in another extra budget, the national debt could possibly break through the 1,100 trillion won mark this year.

By Kim Yon-se (kys@heraldcorp.com)