Semiconductor Boom Narrows Jan-Sept Fiscal Deficit to 32 Trillion Won, "Smallest" in 8 Years

Ministry of Planning and Budget Releases November Edition of Monthly Fiscal Trends

Fueled by a semiconductor boom, a sharp increase in corporate tax revenue helped narrow the fiscal deficit to 32 trillion won in the first nine months of this year. The deficit shrank by more than 70 trillion won from a year earlier, reaching its lowest level in eight years, since 2018.

According to the November edition of the Monthly Fiscal Trends report released by the Ministry of Planning and Budget on November 12, cumulative total revenue from January to September this year reached 605.4 trillion won, up 124.6 trillion won from the same period last year.

Yonhap News Agency

The main driver of the increase in total revenue was a sharp rise in tax revenue. National tax revenue totaled 385 trillion won in the first nine months, up 95.4 trillion won from the same period a year earlier. In particular, corporate tax revenue surged by 51.9 trillion won from a year earlier to 127.8 trillion won, buoyed by improved operating results at major companies, including semiconductor firms. This reflected strong results from installment payments in September, following companies' payment of interim corporate taxes in August on the strength of solid first-half results. An official at the ministry said, "Improved business performance, led by semiconductors, significantly increased national tax revenue, including corporate taxes," adding, "Companies make corporate tax payments in installments, and payment results were strong both last month and this month, contributing to a substantial increase in total revenue."

Income tax revenue also rose by 15.7 trillion won, driven by an increase in earned income tax revenue as performance bonuses grew and an expansion in capital gains tax revenue amid higher real estate transaction volumes. The special tax for rural development (10.3 trillion won) and securities transaction tax (7.5 trillion won) also performed well, supported by higher stock market trading value and the restoration of tax rates. Value-added tax revenue increased by 7.4 trillion won as consumption continued to recover.

Non-tax revenue totaled 34 trillion won, up 9.3 trillion won from the same period a year earlier, while fund revenue, including National Pension Service contributions, increased by 19.9 trillion won to 186.4 trillion won.

Total expenditure over the same period was 584.9 trillion won, up 40.7 trillion won from a year earlier. The execution rate against the annual budget stood at 77.7%.

As total revenue growth far outpaced total expenditure, the consolidated fiscal balance, calculated by subtracting total expenditure from total revenue, posted a surplus of 20.4 trillion won. This marked an improvement of 83.9 trillion won from a deficit of 63.5 trillion won in the same period last year and set a record since statistics began in 2014.

The managed fiscal balance, which excludes the surplus in social security funds such as the National Pension Service from the consolidated fiscal balance and reflects the government's underlying fiscal position, recorded a deficit of 32 trillion won. This was 70.5 trillion won less than the deficit of 102.4 trillion won a year earlier, marking the strongest level in eight years, since 2018, when the deficit was 17.3 trillion won. Both indicators posted their largest-ever improvements from a year earlier.

Central government debt stood at 1,369.4 trillion won at the end of September, down 2.7 trillion won from the previous month. The decline reflected a concentration of 18.6 trillion won in government bond redemptions at the end of the quarter, exceeding the 17.4 trillion won issued during the month. However, central government debt was still up 101.3 trillion won from the end of last year.

A total of 16.4 trillion won in government bonds, including 12 trillion won through competitive bidding, was issued in the government bond market in October. Cumulative issuance from January to October reached 196.1 trillion won, or 87.7% of the annual issuance limit. Outstanding government bonds totaled 1,271.7 trillion won at the end of October, while foreign holdings rose by 6.9 trillion won over the month to 326.5 trillion won, or 25.7% of the total. The government bond funding rate fell to 4.07% from 4.25% the previous month as supply-demand pressures eased, while the bid-to-cover ratio rose to 271% from 243%, indicating improved funding conditions.

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