Image: National Housing and Urban Fund. Credit: National Housing and Urban Fund
For two years in a row, the Ministry of Strategy and Finance 기획재정부 under the Yoon Suk-yeol 윤석열 presidency has badly missed the mark on expected tax receipts. In 2023, the MSF’s miscalculation led to a budget shortfall of KRW 56.4t (USD 40.9b). This year, MSF again missed the mark by KRW 29.6t (USD 21.5b). (See previous coverage, “Tax Receipts Plummet.”)
The Yoon administration has been making up the difference by plundering public funds earmarked for other purposes. Last year, the Yoon administration took more than KRW 20t (USD 15b) from the Exchange Equalization Fund 외국환평형기금, the fund earmarked for stabilizing the exchange rate - which led to greater exchange rate volatility for the Korean won. (See previous coverage.) This year, the administration is once again dipping into the Exchange Equalization Fund for as much as KRW 6t (USD 4b).
Even more controversially, the Yoon administration is also taking as much as KRW 3t (USD 2.2b) from the National Housing and Urban Fund 주택도시기금. Unlike the EEF, which consists of government bonds, the NHUF comprises direct deposits from the public. By depositing at least KRW 100k (USD 75) per month into the NHUF, prospective South Korean homebuyers receive points that give them priority if they buy a home in a publicly funded housing development.
Beginning on October 25, however, the Yoon administration increased the required monthly deposit to KRW 250k (USD 200), sparking public outcry over the administration indirectly raising taxes to make up for the deficit.
