BofA: Fiscal Prudence To Continue Despite The Near-Term Revenue Shortfall

Bank of America write “Korea faced a tough year of fiscal management in 2023. Notably, the double-digit drop in government revenue (of -10.5% ytd) amid slow progress in revenue collection highlights the real economy's sluggishness, notably weak business earnings and tepid sentiment in the property market.”

• “Meanwhile, the 2024 Budget reaffirms the current administration's prudent fiscal policy stance, with spending set to rise only 2.8% yoy in 2024, the lowest increase since 2005.”
• “As a result, consolidated and managed fiscal deficit is expected to widen slightly to -1.9% and -3.9% in 2024, respectively.”
• “While the government is conservative on KTB issuance, we believe risks are still tilted towards the upside if tax revenue falls short of expectation.”