In 2030, the last year of Lee Jae-myung's term, government total expenditure is expected to top 1,000 trillion won for the first time. The government decided to push a sweeping expansionary fiscal policy, including increasing next year's fiscal expenditure to a record high on the back of excess tax revenue from a semiconductor boom. Despite stronger revenue, government debt in 2030 will reach 1,734 trillion won, up by more than about 300 trillion won from now.
◇ Lee administration's average annual expenditure up 8.4% over 5 years... above the past 20-year average
The Ministry of Planning and Budget said on the 1st it will submit the "2027 budget proposal" and the "2026–2030 National Fiscal Management Plan" to the National Assembly. The National Fiscal Management Plan, which the government draws up every year, lays out the direction of the national finances for the next five years, including national tax revenue and fiscal expenditure size.
The government decided to expand next year's fiscal expenditure to 820.9 trillion won, up 12.8% from this year's main budget. Of that, the budget will increase 4.9% to 505 trillion won, and funds, including the newly established Future Response Fund, will surge 28.2% to 315.8 trillion won.
Next year's total expenditure growth rate will be the highest on record, surpassing 2009 (10.9%) during the global financial crisis. By year, expenditure will be ▲ 894.6 trillion won in 2028 (growth rate 9%) ▲ 957.4 trillion won in 2029 (7%) ▲ 1,005.2 trillion won in 2030 (5%).
The average annual expenditure growth rate over the five years from this year to 2030 is also 8.4%, exceeding the average annual expenditure growth rate (6.2%) since 2005, when the government began compiling related statistics. It is also much higher than the average annual expenditure growth rate (5.5%) presented in the National Fiscal Management Plan for 2025–2029 released just a year ago.
◇ Mandatory expenditure growth has accelerated... share to rise to 53.5% in 2030
Among fiscal expenditure, the growth rate of mandatory expenditure such as pensions is expected to average 8.5% per year, faster than the 8.3% pace of discretionary expenditure. Analysts said the pace of mandatory expenditure growth is faster than the 6.3% projected in last year's midterm fiscal management plan. The share of mandatory expenditure will fall from 52.8% this year to 52% next year, then rise to 52.8% in 2028 and 53.5% in 2029–2030.
By 12 major areas of fiscal expenditure, health, welfare and employment, which has the largest share, will grow an average of 7.5% per year from 264.4 trillion won this year to 352.5 trillion won in 2030. Next, general and local administration will increase 12.6% from 121.4 trillion won to 195.2 trillion won, and education will rise 7.3% from 99.9 trillion won to 132.3 trillion won.
Expenditure on industry, small and medium-sized enterprises, and energy, which includes investments related to the three mega projects, is projected to rise from 31.8 trillion won to 55.9 trillion won, marking the highest growth rate (15.2%) among the 12 areas.
◇ National tax revenue to grow an average 13.4% under Lee administration... national debt to rise to 1,734 trillion
The government projected national tax revenue will jump 41% from 415.4 trillion won based on this year's supplementary budget to 584.4 trillion won next year. It is expected to rise to 606.7 trillion won the year after next, 625.5 trillion won in 2029, and 644.8 trillion won in 2030, averaging 13.4% growth over five years. A year ago, the outlook saw national tax revenue for 2025–2029 growing an average 4.6%, but the projection has been greatly raised.
Thanks to this, the fiscal balance will improve despite the large-scale expansionary fiscal stance, the Ministry of Planning and Budget said. The consolidated fiscal balance, which is total revenue minus total expenditure, will shift from a 52.5 trillion won deficit this year to a 59.9 trillion won surplus next year and a 25.8 trillion won surplus the year after next. However, it is forecast to return to a 5.6 trillion won deficit in 2029, with the shortfall widening to 20.6 trillion won in 2030.
The managed fiscal balance deficit, which excludes the surpluses of the four social security funds such as the National Pension Service and employment insurance from the consolidated fiscal balance to show the practical state of the public finances, is projected to shrink from 107.6 trillion won this year to 100.8 trillion won in 2030. As the nominal growth rate rises, the share of government debt to gross domestic product (GDP) will fall from 50.6% to 49%. Over the same period, government debt will increase from 1,412.8 trillion won to 1,734.1 trillion won in 2030.
Minister Park Hong-geun said at a pre-briefing for reporters on the 28th, "At a crossroads where structural low growth could become entrenched due to a shrinking working-age population and stagnant productivity, we must carry the momentum of this (growth rate) recovery into a trend reversal in the potential growth rate."