Seoul: The South Korean government is grappling with a significant tax revenue shortfall this year, projected to be 29.6 trillion won ($21.4 billion) less than expected. The Ministry of Economy and Finance announced on Monday plans to utilize 14 to 16 trillion won from three specific funds to address the deficit, including the foreign exchange stabilization fund, the national housing and urban fund, and the public capital management fund. Importantly, the government clarified that it would not issue new government bonds to cover the shortfall. According to Yonhap News Agency, the remaining gap will be managed by withholding approximately 6.5 trillion won in national tax subsidies intended for local governments and education offices, and by reallocating 7 to 9 trillion won in unused budget funds. Among the three designated funds, the foreign exchange stabilization fund is expected to see the most significant reduction, with up to 6 trillion won being utilized. This approach mirrors the government's response to a similar shortfall last year when it faced a 56.4 trillion won deficit and relied on 19 trillion won from public funds. Despite assurances of sufficient international reserves, currently at $420 billion, the ninth largest globally, concerns persist due to the weakening Korean currency nearing the 1,400-won mark against the US dollar. This situation recalls the financial crisis of 1997, when South Korea faced a dollar shortage and subsequent economic restructuring. The decision to draw up to 3 trillion won from the national housing and urban fund, initially established to support housing welfare projects for low-income households, has sparked criticism. Critics argue that this expedient financial management, akin to "paying one card off with another," poses risks to the fund's intended beneficiaries and highlights the government's failure to accurately forecast tax revenue. The ministry's inaccurate forecasting, particularly regarding corporate taxes, has significantly contributed to the shortfall. Corpo rate taxes for the first three quarters were 23.8 trillion won less than anticipated, influenced by zero corporate tax from major companies like Samsung Electronics and SK hynix due to a downturn in the semiconductor sector. Additionally, the government's tax reduction policies, including lowering the fuel tax five times since 2021, have exacerbated the revenue shortfall. The ministry estimates that without these reductions, an additional 13 trillion won could have been collected over three years. Proposed repeals of other taxes, such as the financial investment income tax, could further reduce annual revenue by 1.5 trillion won. Generous social welfare policies have also strained government finances, with increased salaries for enlisted soldiers and higher basic pensions for senior citizens. Opposition parties, particularly the Democratic Party of Korea, are advocating for further expenditures, such as distributing gift vouchers to all citizens, which would cost an estimated 12.5 trillion won. Utilizing s pecial-purpose funds to cover shortfalls is not without cost, as these funds carry interest rates similar to government bonds, potentially increasing national debt. Despite the Yoon government's criticism of its predecessor's expansionary fiscal policies, its reliance on quick fixes raises questions about its commitment to sound fiscal management. Calls for stricter fiscal rules, prominent towards the end of the previous administration, have notably diminished.