First Half Government Deficit at 84.4 Trillion Won... Smallest in 3 Years Thanks to Semiconductor and Stock Market Booms

Ministry of Planning and Budget Releases August Fiscal Trend Report on the 13th

In the first half of this year, the government's fiscal deficit reached 84.4 trillion won, marking the smallest deficit in three years. Although expenditures increased due to support funds for those affected by high oil prices and financial support for the National Health Insurance, the fiscal balance improved as tax revenues surged in the wake of the semiconductor boom and rising stock markets.

According to the August edition of the “Monthly Fiscal Trends” published by the Ministry of Strategy and Budget on August 13, total revenue through June this year stood at 381.9 trillion won, an increase of 61.3 trillion won from a year earlier. National tax revenue amounted to 223 trillion won, up 33 trillion won (17.4%) compared to the same period last year. This growth rate was the highest since 2022 (20.1%). The tax revenue progress rate marked 54.5%.

By tax category, income tax grew by 10.4 trillion won. This was attributed to increased earned income tax resulting from higher performance bonuses during the semiconductor boom, along with a rise in capital gains tax due to increased real estate transactions. Fueled by a bullish stock market, securities transaction tax revenues increased by 5.2 trillion won, while corporate tax rose by 4.3 trillion won as corporate earnings improved. Value-added tax climbed by 4.9 trillion won, mainly due to an increase in imports and a reduction in tax refunds. Non-tax revenue was 28.4 trillion won, an increase of 9 trillion won over the previous year, and fund revenue also rose by 19.3 trillion won to 130.6 trillion won.

Total expenditures reached 425.8 trillion won, up 36.6 trillion won from the previous year. An official from the Ministry of Strategy and Budget explained that this was mainly influenced by the implementation of support funds for victims of high oil prices, health insurance subsidies for subscribers during the first half of the year, increased fiscal grants tied to the rise in tax revenues, and higher pension outlays due to growing numbers of National Pension Service subscribers. As a result, the consolidated fiscal balance, calculated as total revenue minus total expenditures, recorded a deficit of 43.9 trillion won. The managed fiscal balance—which excludes the four major social security funds such as the National Pension Service, and reflects the government's actual fiscal condition—showed a deficit of 84.4 trillion won. An official from the ministry stated, "Compared to the previous year, the consolidated fiscal balance and the managed fiscal balance improved by 24.7 trillion won and 9.9 trillion won, respectively," adding, "The managed fiscal deficit is the smallest since June 2023."

As of the end of June, the central government's debt stood at 1,338.5 trillion won, down 6.8 trillion won from a month earlier. From January to July, government bond issuance amounted to 141.1 trillion won, corresponding to 63.1% of the annual issuance limit. In July, government bond yields rose, influenced by the resurgence of military conflict between the United States and Iran, which drove up oil prices and interest rates in major economies, as well as heightened caution over a possible base rate hike in August.

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