Fiscal Deficit at 64.8 Trillion Won Through July... Lowest in Five Years

Ministry of Planning Releases "Monthly Fiscal Trends"
Total Revenue at 456.1 Trillion Won, Total Expenditure at 476.2 Trillion Won
National Debt Reaches 1,354.2 Trillion Won, Up 15.7 Trillion Won

The managed fiscal balance, which reflects the country's actual fiscal health, posted a deficit of 64.8 trillion won from January to July this year. Thanks to a significant increase in tax revenue, the deficit narrowed by 22 trillion won compared to last year, marking the lowest level in five years since the cumulative figure as of July 2021. However, central government debt increased by 86.1 trillion won compared to the end of last year, indicating that the fiscal burden persists.

According to the September issue of the "Monthly Fiscal Trends" released by the Ministry of Planning and Budget on September 11, total revenue for January to July this year amounted to 456.1 trillion won, a 71.1 trillion won increase from the same period last year. The execution rate, based on the supplementary budget, was 65.1%. The increase in national tax revenue was the main driver of total revenue growth. National tax revenue from January to July was 274 trillion won, up 41.4 trillion won from the same period the previous year.

By tax category, income tax increased by 12.2 trillion won. This was mainly due to the increase in earned income tax resulting from higher performance bonuses and the increase in capital gains tax following a rise in real estate transaction volume. Value-added tax increased by 8.1 trillion won, influenced by higher private consumption and imports. Corporate tax rose by 4.4 trillion won, supported by improved corporate earnings. Securities transaction tax increased by 6.4 trillion won, due to growth in securities trading volume and a return to the previous tax rate. The special rural tax rose by 8.5 trillion won, reflecting increased transaction volume on the KOSPI. Non-tax revenue grew by 9 trillion won year-on-year to 30.1 trillion won, and fund revenue increased by 20.7 trillion won to 152 trillion won.

Five days before the Lunar New Year holiday, cash transport officials are conducting the release of Lunar New Year funds to be supplied to commercial banks at the Bank of Korea headquarters in Jung-gu, Seoul. Yonhap News

During the same period, total expenditure amounted to 476.2 trillion won, 33.7 trillion won more than last year. The execution rate, based on the supplementary budget, was 63.2%. The consolidated fiscal balance, which subtracts total expenditure from total revenue, posted a deficit of 20.1 trillion won. This represents a 37.4 trillion won decrease in the deficit from the 57.5 trillion won recorded over the same period last year. The managed fiscal balance, which excludes social security funds to reflect the government's actual fiscal status, was a deficit of 64.8 trillion won, 22 trillion won less than the year before. The social security funds posted a surplus of 44.7 trillion won.

Though the fiscal balance improved, the pace of government debt increase continued. As of the end of July, central government debt stood at 1,354.2 trillion won, up 15.7 trillion won from the previous month and 86.1 trillion won higher than at the end of last year. The balance of government bonds grew by 83.1 trillion won, and foreign exchange equalization bonds increased by 5.6 trillion won, while the balance of National Housing Bonds decreased by 2.6 trillion won.

In August, the government issued 21.2 trillion won in government bonds. The cumulative volume of government bonds issued from January to August reached 162.3 trillion won, accounting for 72.6% of the annual issuance limit. Including 1.3 trillion won in retail government bonds, the cumulative issuance reached 163.6 trillion won. In August, foreign holdings of government bonds fell by 3.4 trillion won month-on-month to 323.3 trillion won, representing 25.7% of the outstanding government bond balance.

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