Jeonnam Gwangju Transition Team: "Integrated City Cannot Begin with Debt"

Second Half Revenue to Rise by 103.1 Billion Won, but Essential Expenditures Expected to Reach 503.4 Billion Won

Combined Debt Stands at 3.6514 Trillion Won; Insufficient Funds for New Policy Initiatives

"20 Trillion Won in Support Should Be Institutionalized as Block Grant or Integrated Special Allocation Tax"

"The launch of Jeonnam Gwangju Integrated City cannot begin with debt."

It has been analyzed that Jeonnam Gwangju Special City, which will be officially launched on July 1, is expected to face a resource shortfall of 40.03 billion won in its first year. The Jeonnam Gwangju Daejeon Transition Planning Committee, the transition team for Mayor-elect Min Hyung-bae, held a briefing on the financial status on the 18th, stating that the fiscal independence of the integrated special city remains among the lowest nationwide, and that the debt burden is significant. The committee emphasized the urgent need for normalization of the fiscal structure.

Democratic Party of Korea's Min Hyung-bae, elected special mayor of Jeonnam-Gwangju integration, speaks after paying respects at the National May 18th Democratic Cemetery in Unjeong-dong, Buk-gu, Gwangju, on the morning of the 4th. Photo by Yonhap News

According to the Transition Planning Committee, while revenue growth for Jeonnam and Gwangju in the second half of this year is expected to be only 10.31 billion won, essential expenditures such as educational fiscal grants, support for free school meals, and local matching funds for national subsidy projects are estimated to reach 50.34 billion won.

As a result, the resource shortfall by the end of the year is projected to be 40.03 billion won: 38.08 billion won in Gwangju and 1.95 billion won in Jeonnam.

The Transition Planning Committee explained that Gwangju's expenditure requirement of 41.89 billion won represents the minimum necessary to cover statutory and essential expenses such as educational fiscal grants, support for free school meals, and matching funds for national projects. Even meeting only these essential needs will result in a considerable fiscal burden.

The committee further diagnosed that, following the launch of the integrated special city, there will be virtually no available resources to pursue new policy projects for citizens or fulfill campaign pledges of the mayor.

Seungju Baek, Vice Chairman of the Jeonnam Gwangju Daejeon Transition Planning Committee, is briefing on the financial status of Jeonnam and Gwangju Metropolitan City at the Bitgaram Complex Culture and Sports Center in Naju, Jeonnam, on the morning of the 18th. Photo by Bohyun Song

The debt burden is also considerable.

As of the end of last year, the combined outstanding debt of Jeonnam and Gwangju amounted to 3.6514 trillion won—1.4261 trillion won for Jeonnam and 2.2253 trillion won for Gwangju.

The debt ratio was 10.35% for Jeonnam and 25.61% for Gwangju. Even after excluding local bonds issued for long-delayed park development in Gwangju, the debt ratio still reaches 21.66%.

The Transition Planning Committee stated that Gwangju has continuously issued local bonds for large-scale investment projects such as the construction of Subway Line 2. The current level of debt and debt ratio is expected to exert substantial pressure on the fiscal management of the future integrated special city.

After integration, the budget scale will reach 19.4 trillion won, ranking third nationwide after Seoul and Gyeonggi Province. However, the fiscal independence ratio will stand at 27.3%, which is lower than Gwangju prior to integration (33.9%) and remains between the levels of Jeonnam (23.4%) and Gwangju.

The Transition Planning Committee announced plans to improve fiscal conditions by conducting a comprehensive review of existing fiscal projects, consolidating similar and overlapping projects, reassessing underperforming projects, strengthening performance evaluations for subsidy projects, and enhancing expenditure management.

Additionally, the committee said it would continue to request special cases for the calculation of local allocation tax due to the integration and an expansion of fiscal support from the central government. It also pledged to ensure that the promised total of 20 trillion won in support—5 trillion won per year from the government—is provided without disruption.

Vice Chairman Baek Seungjoo said, "The launch of the integrated city cannot start with debt," and added, "The 20 trillion won in support needs to be institutionalized, either as a block grant or through the establishment of a special integrated allocation tax."

This content was produced with the assistance of AI translation services.