Sejong, which launched with the aim of becoming Korea's administrative capital, is facing a dual crisis of fiscal pressure and population stagnation. With a lack of a base of corporations limiting local government tax revenue, the expense of managing national and public facilities rises every year, and the slowdown in population inflows is weakening the city's growth engine, critics say. Some in the region are even raising the possibility of a "moratorium (default)."
◇ Received 115.9 billion won in allocation tax, spent 128.5 billion won just on facility management
On the 17th, according to the government and Sejong, the government is reviewing forming a task force (TF) to examine Sejong's administrative and fiscal structure. A government official said, "We are reviewing the formation of a consultative body to discuss ways to strengthen Sejong's functions," adding, "In particular, Sejong requested talks on fiscal issues, and related consultations are underway."
Unlike other local governments, Sejong has a single-tier structure without basic-level municipalities. The city must shoulder all finances needed for both metropolitan and basic-level functions. On top of that, as a planned city built under the national lead as the administrative city, it has many public facilities to manage.
But the fiscal conditions are not ample. Last year, Sejong received 115.9 billion won in general allocation tax from the central government. That is a big gap from the size of allocation tax for Jeju Special Self-Governing Province, which also has a single-tier structure (1.8121 trillion won). Even compared with Wonju, Gangwon, which has a similar population of about 360,000 and received 478.6 billion won, Sejong's amount is about a quarter.
The share of general allocation tax in the main budget is also low. As of 2025, the allocation tax share for Sejong is 8%, well below the national city and province average of 21.7%. The allocation tax per resident is about 300,000 won, far short of the national average of 1.78 million won.
Meanwhile, the expenditure burden keeps rising. Last year, Sejong spent 128.5 billion won just on maintenance and management costs for facilities transferred from the central government. In other words, facility management costs exceeded the allocation tax it received.
Choi Min-ho, the Sejong mayor, at a central-local cooperation meeting presided over by President Lee Jae-myung in Nov. last year, pointed out the irrationality of calculating the general allocation tax, and Lee expressed agreement, saying it was "a valid point." "We are in a paradoxical situation where money for welfare for residents and local development is drying up because we have to manage facilities created directly by the government," Choi emphasized.
◇ "Net outflow of population" for the first time in 13 years… "Need to strengthen the base of corporations and industry"
Population growth has also slowed. After launching in 2012 as the administrative city, Sejong grew rapidly with the transfer of government ministries. The population, which was 100,000 at the time of launch, surpassed 360,000 in 2021, more than tripling in 10 years.
But recently, the growth has visibly slowed. The original goal was a population of 800,000 by 2030, but the target has been pushed back to 2040. Due to low birthrates and out-migration during schooling years, outflows are exceeding inflows.
In fact, last year Sejong recorded a net outflow of population for the first time since its launch. In 2025, in-migrants numbered 54,355 and out-migrants 54,402, meaning 47 more people left. The net inflow structure that had continued since the city's 2012 launch was broken after 13 years.
The total population is also on the decline. Sejong's population peaked at 392,495 in Nov. last year before starting to fall, dropping to 391,477 as of Jan. this year. In particular, net outflows are appearing among those ages 15 to 24, signaling a shift in the population structure.
Experts point to a structural limit in that Sejong was designed around infrastructure. As the city grew centered on public institutions and administrative facilities, the base of corporations and industry did not take root sufficiently.
Korea Development Institute (KDI) said in a recent report that "Sejong's capacity to accommodate population has increased, but there were limits to creating economic incentives that drive large-scale inflows." Indeed, Sejong's population has stagnated around 400,000, about half the target of 800,000. Kim Sun-ham, KDI associate research fellow, said, "Only if productivity improves can population inflows continue and local growth translate into national economic growth," adding, "Policies to strengthen the base of corporations and industry are needed."