Fiscal Deficit at KRW 43 Trillion Through August, Down KRW 45 Trillion Year-on-Year on Strong Corporate and Income Tax Revenue

Ministry of Planning and Budget's "Monthly Fiscal Trends" October Issue
Total Revenue at KRW 529.7 Trillion, Up KRW 98 Trillion Year on Year
Corporate Tax Up KRW 28.2 Trillion; Income Tax Up KRW 14.4 Trillion

The managed fiscal balance, which reflects the government’s actual fiscal health, posted a deficit of KRW 43 trillion through August 2026. The deficit narrowed by KRW 45.3 trillion from the same period last year. The fiscal balance improved as national tax revenue rose sharply, driven by higher corporate tax revenue amid improved business performance, as well as increases in income tax and securities transaction tax. However, central government debt rose by more than KRW 100 trillion from the end of 2025, approaching KRW 1,400 trillion.

According to the October issue of Monthly Fiscal Trends, published by the Ministry of Planning and Budget on October 15, 2026, the managed fiscal balance recorded a deficit of KRW 43 trillion from January to August 2026. This was KRW 45.3 trillion less than the deficit of KRW 88.3 trillion recorded over the same period last year. The managed fiscal balance is an indicator calculated by excluding the balances of social security funds, such as the National Pension and employment insurance, from the consolidated fiscal balance. It is used to show the government’s actual fiscal position.

The Bank of Korea announced that gross national income per capita rose 2.6 percent year-on-year to $33,745 last year. The photo shows an employee sorting 50,000-won bills at Hana Bank's headquarters in Jung-gu, Seoul, on the 5th. Photo by Kang Jinhyung, aymsdream@.

Over the same period, the consolidated fiscal balance recorded a surplus of KRW 5 trillion. It improved by KRW 58.8 trillion, shifting from a deficit of KRW 53.7 trillion over the same period last year to a surplus. The surplus in social security funds reached KRW 48.1 trillion, an increase of KRW 13.5 trillion from a year earlier.

The fiscal balance improved because total revenue growth far outpaced growth in total expenditure. From January to August 2026, total revenue was KRW 529.7 trillion, up KRW 98 trillion from the same period a year earlier. Total expenditure was KRW 524.7 trillion, an increase of KRW 39.3 trillion. The increase in total revenue was about KRW 58.7 trillion greater than the increase in total expenditure.

National tax revenue rose particularly sharply. Cumulative tax revenue through August reached KRW 329.9 trillion, up KRW 69.1 trillion from the same period last year. This represented 79.4% of the annual national tax revenue budget of KRW 415.4 trillion, including the supplementary budget, putting the collection rate 9.3 percentage points higher than a year earlier.

By tax category, corporate tax recorded the largest increase, reflecting improved business performance. Corporate tax revenue rose by KRW 28.2 trillion from the same period a year earlier. Income tax revenue also increased by KRW 14.4 trillion, driven by factors including higher earned income tax revenue due to an increase in performance bonuses and higher capital gains tax revenue amid increased real estate transaction volumes.

Securities transaction tax revenue rose by KRW 7 trillion as trading value increased and the tax rate returned to its previous level. Special tax for rural development also increased by KRW 9.5 trillion, partly due to higher trading value on the KOSPI. Value-added tax revenue rose by KRW 7.4 trillion, supported by higher import values and private consumption. Non-tax revenue totaled KRW 32 trillion, up KRW 9.2 trillion from the same period last year. Fund revenue reached KRW 167.8 trillion, an increase of KRW 19.8 trillion.

On the expenditure side, transfer payments led the increase. Cumulative transfer payments through August totaled KRW 395.6 trillion, up KRW 35.2 trillion from the same period a year earlier. Personnel expenses increased by KRW 1.2 trillion, asset acquisitions by KRW 500 billion, and goods and services expenses by KRW 600 billion.

Although the fiscal deficit narrowed, central government debt continued to rise. At the end of August, central government debt stood at KRW 1,372.1 trillion, up KRW 17.9 trillion from the previous month and KRW 104 trillion from the end of 2025. This was driven by a KRW 102.1 trillion increase in the balance of Treasury bonds from the end of 2025 and a KRW 4.7 trillion increase in the balance of Foreign Exchange Stabilization Fund bonds. The balance of National Housing Bonds fell by KRW 2.8 trillion.

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