NABO Long-term Fiscal Projections 2025-2072

Published on February 21, 2025
Published by Estimates & Tax Coordination Division

   The National Assembly Budget Office (NABO) conducts long-term fiscal projections to assess fiscal risks facing the country in the medium to long-term. These projections are based on the Demographic Scenario for 2022-2072 (issued by Statistics Korea in December 2023) and the Long-term Economic Outlook (issued by NABO in October 2024) and assume that the current tax laws and systems are maintained. They also incorporate the approved budget for 2025 and the tax law amendments for 2024.
   Under the median demographic scenario, total revenue is projected to increase from KRW 650.6 trillion (24.5% of GDP) in 2025 to KRW 930.2 trillion (22.0% of GDP) in 2072 at an annual average growth rate of 0.8%, while total expenditure is expected to jump from KRW 676.3 trillion (25.5% of GDP) in 2025 to KRW 1,418.5 trillion (33.6% of GDP) in 2072 at a higher annual average growth rate of 1.6%. Consolidated fiscal balance, calculated as total expenditure subtracted from total revenue, is projected grow from a deficit of KRW 25.7 trillion (△1.0% of GDP) in 2025 to KRW 488.3 trillion (△11.6% of GDP) in 2072. Managed fiscal balance, calculated as social security funds (i.e. the national pension fund, the private school teachers' pension fund, the employment insurance fund, and the industrial accident compensation fund) subtracted from consolidated fiscal balance, will expand from a deficit of KRW 83.5 trillion (△3.2% of GDP) in 2025 to KRW 270.7 trillion (△6.4% of GDP) in 2072. As the managed fiscal balance deficit continues, government debt is estimated to grow at an annual growth rate of 3.8% from KRW 1,270.4 trillion (47.8% of GDP) in 2025 to KRW 7,303.6 trillion (173.0% of GDP) in 2072.
   Meanwhile, in terms of the fiscal sustainability of the national pension fund and the private school teachers' pension fund, assuming no changes to the current fund systems in future years and under the median demographic scenario, the accumulated reserves of these two funds will be exhausted by 2057 and 2042, respectively, and their accumulated fiscal deficit is expected to reach 63.3% of GDP in 2072.