The Ministry of Economy and Finance last week briefed President Moon Jae-in on the draft budget proposal for next year, which is set at about 600 trillion won ($511 billion).

The figure represents a 7.5 percent on-year increase from this year’s record-high national budget of 558 trillion won. The increase rate is 1.8 percentage points higher than the planned 5.7 percent rise in spending next year under the midterm fiscal management blueprint for 2020-2024, which was set up last year.

The government plans to submit the 2022 budget proposal to the National Assembly by Sept. 3.

Worryingly, fiscal expenditure for next year is likely to be further bloated as the ruling Democratic Party of Korea is calling for a drastic increase in the state budget.

Yun Ho-jung, the floor leader of the party, recently said budget planners should not be allowed to deepen people’s anxiety by drawing up an insufficient budget.

Ruling party lawmakers stress the need for more fiscal expenditure to ease the people’s suffering and bolster economic recovery amid the prolonged pandemic. But the ruling party also seems to need expanded spending to fund various populist programs designed to help forge voter sentiment in favor of its candidates for next March’s presidential election and local polls to be held nationwide three months later.

Prior to the outbreak of COVID-19 here early last year, President Moon Jae-in’s government had been expanding fiscal expenditure at a steep pace to offset the negative effects of its ill-conceived policies such as the income-led growth drive. Annual government spending, which stood at 400.5 trillion won in 2017 when Moon took office, increased to 558 trillion won last year, with the national debt soaring from 660.2 trillion won to 963.9 trillion won over the cited period.

If the 2022 budget increases by 7.5 percent on-year as planned by the government, the national debt is projected to exceed 1,000 trillion won for the first time next year, with the ratio of national debt to gross domestic product estimated to pass the 50 percent mark, which is unheard of.

Fiscal conditions could worsen further if tax revenues fall short of expectations.

The government has drafted the massive spending plan for 2022 based on the assumption that tax revenues will continue to rise amid growing exports and booming stock and real estate markets. But the assumption looks too rosy, given that uncertainties over tax collection are increasing amid a resurgence of COVID-19, driven by the fast spread of the highly transmissible delta variant and the slow pace of vaccinations.

The on-year increase in tax revenues declined from 12.8 trillion won in April to 10.8 trillion won in May and 5.2 trillion won in June. Levies collected from companies, which increased by over 10 trillion won in the first half of this year, decreased by 1.4 trillion won in June.

The country could see a sudden shortage of tax revenue if interest rate hikes, which are likely to come within the year, have a negative impact on the stock and property markets.

The government has little fiscal room to cope with a possible drop in tax revenues. It has used up the surplus revenue of 48.8 trillion won in the first half of the year to finance the two supplementary budgets drawn up this year.

Questions have also been raised about the feasibility of many fiscal spending programs. Unused funds from last year’s budget came to 34 trillion won, according to data submitted this week to an opposition lawmaker by the National Assembly Budget Office.

The government needs to restructure the draft budget proposal for next year and the parliament should trim it through deliberation.

There is a limit to the bid to bolster domestic consumption and increase employment with taxpayers’ money. Increased fiscal spending under the Moon administration has only resulted in worsening unemployment and widening income disparity.

Policy efforts should focus on strengthening economic fundamentals and reinvigorating corporate activity through sweeping deregulation and structural reforms.

It is also one of the last obligations of the Moon government to reduce the financial burden that future generations will have to shoulder.