Seoul: Government finances recorded a deficit exceeding 100 trillion won ($66.7 billion) for a second consecutive year in 2025, highlighting mounting concerns over fiscal sustainability.

According to Yonhap News Agency, the government's fiscal report approved Monday revealed that the combined debt of central and local governments surpassed 1.40 quadrillion won for the first time, reaching 49 percent of GDP.

The widening deficit is a result of continued expansionary spending that has outpaced fiscal capacity. Such policies, if maintained amidst ongoing conflicts in the Middle East, are likely to intensify pressures on fiscal soundness, leaving limited room for policy response. The management fiscal balance, a key indicator of fiscal health, reported a deficit of 104.2 trillion won, or 3.9 percent of GDP, slightly improved from the previous year but still above the government's fiscal rule threshold of minus 3 percent.

In an international context, Korea's debt is increasing at a rapid pace. The general government debt ratio, which includes liabilities of noncommercial public institutions, climbed to 56.7 percent of GDP, ranking 19th among 37 major economies, a significant jump from the 30th position in 2008. Concerns over the accuracy of tax revenue forecasts are also on the rise. Despite strong semiconductor exports, a discrepancy of about 25 trillion won emerged within just three months of the fiscal year, a gap too significant to be attributed to a simple technical error.

The controversy surrounding a supplementary budget further reflects these concerns. Although the government described the plan as not requiring additional government bond issuance, analysis by the National Assembly Budget Office suggests otherwise. Without the supplementary budget, excess tax revenue would have been carried over as surplus, with more than half used to reduce national debt. Instead, redirecting these funds to spending has an effect similar to issuing new debt.

As fiscal rules, transparency, and revenue forecasting come under scrutiny, the risk of what some describe as "fiscal addiction" increases. Rising debt ultimately shifts the burden onto future generations, particularly affecting young people already facing a challenging job market. In times of crisis, fiscal resources must be allocated with discipline and precision. As the National Assembly reviews the supplementary budget, described as a "wartime budget," it is crucial to screen out unnecessary or populist spending and focus on measures that are both necessary and sustainable.