The government submitted the 2021 budget proposal set at a record 555.8 trillion won ($468.5 billion) to the National Assembly on Thursday for approval, the deadline of which falls on Dec. 2.

The bloated budget, up 8.5 percent from the spending plan for this year, is designed to kick-start a post-pandemic economic recovery, create more jobs and expand social infrastructure and welfare schemes.

South Korea’s annual fiscal deficit is projected to reach a record 109.7 trillion won next year, accounting for 5.4 percent of its gross domestic product, compared to an estimated 3.5 percent for 2020.

The Ministry of Economy and Finance plans to issue 90 trillion won in state bonds to help cover the deficit.

The country’s national debt is forecast to increase by 140 trillion won over the course of next year to 945 trillion won, with the national debt-to-GDP ratio set to jump from 39.8 percent to 46.7 percent over the cited period.

After the spending plan for 2021 was endorsed by the Cabinet on Tuesday, Finance Minister Hong Nam-ki told reporters that it was desirable to create a virtuous circle, in which increased government spending boosted the economic recovery and in turn restored fiscal soundness.

But the steep rises in fiscal deficit and national debt may well deepen concerns over what many economists see as a reckless spending spree pushed by President Moon Jae-in’s administration since it assumed office in May 2017.

The 8.5 percent increase in the budget next year follows a 9.1 percent hike for this year and 9.5 percent rise for last year.

The Moon administration, which has implemented three supplementary budgets worth 35 trillion won combined so far this year, is considering drawing up a fourth one to cope with the impact of the resurgence in coronavirus cases. Last year, it implemented an extra budget worth 7 trillion won to help bolster the economy and create more jobs.

Experts worry the country’s fiscal deficit and national debt will grow at a steeper pace than projected by the government.

The government expects to collect 483 trillion won in total revenue next year, up 0.3 percent from this year, based on the assumption that the economy will grow 0.1 percent in 2020 and 3.6 percent in 2021.

But the assumption seems overly optimistic, compared to estimates by economic institutions at home and abroad.

In its latest growth outlook last week, the Bank of Korea predicted Asia’s fourth-largest economy would contract 1.3 percent this year and expand 2.8 percent next year. The projections marked a sharp cut from its estimates in May of a 0.2 percent contraction in 2020 and a 3.1 percent expansion in 2021.

The Organization for Economic Cooperation and Development and the International Monetary Fund forecast that Korea’s growth rate would remain in negative territory this year, while expecting it to rebound to 3.1 percent and 3 percent, respectively, in 2021.

Lower-than-expected growth would result in a shortfall in revenue, as corporate, individual income and value-added taxes to be collected would fall far short of the government-set target.

If the government had to issue additional state bonds to make up for revenue deficits in 2021, the national debt-to-GDP ratio might exceed 50 percent by the end of the year.

Fitch Ratings, a global credit rating agency, has warned that Korea’s sovereign credit rating could be downgraded if its national debt-to-GDP ratio reached 46 percent by 2023. If fiscal spending continues to increase at the current pace, the figure is projected to exceed 60 percent in three years’ time.

With the Korean won not among key reserve currencies, the downgrading of the nation‘s sovereign credit rating might result in destabilizing local financial markets and increasing borrowing costs for the government and corporations.

The proposed budget for next year shows the Moon administration has little concern about the worsening fiscal health.

Nearly 200 trillion won, or about 36 percent of the total, is set to be allocated to fund populist programs in welfare and labor sectors, with 1.8 trillion won earmarked to hand out shopping coupons to some 23 million people.

Coupled with the rapid aging of the population and low birthrate, the increase in fixed expenditures on expanded welfare benefits and bloated government organizations will accelerate the rise in fiscal deficit.

Serious consideration should now be given to measures to rein in fiscal spending over the long term by setting a limit on the national debt-to-GDP ratio and enacting other rules on fiscal balance.