National Debt Increases and Fiscal Soundness Deteriorates... Jan-Apr Managed Fiscal Balance Deficit of 56.6 Trillion Won

'Monthly Fiscal Trends June Issue'... Total Revenue from January to April 166.3 Trillion KRW, Down 4.4 Trillion KRW YoY

[Asia Economy Reporter Kwangho Lee] The deficit in the management fiscal balance, which reflects the national finances, recorded the largest deficit ever due to increased fiscal spending caused by the novel coronavirus infection (COVID-19). With the third supplementary budget (supplementary budget) planned following the first and second rounds to stimulate the sluggish economy, fiscal soundness is expected to deteriorate further.

According to the "Monthly Fiscal Trends June Issue" published by the Ministry of Economy and Finance on the 9th, total revenue from January to April this year was 166.3 trillion won, a decrease of 4.4 trillion won compared to the same period last year.

During the same period, national tax revenue was 100.7 trillion won, down 8.7 trillion won.

This was due to a decrease of 3.7 trillion won in value-added tax caused by the increase in local consumption tax rate (15→21%) and consumption contraction, and the deferral of some tax payments due to the extension of the COVID-19 related filing and payment deadlines.

Corporate tax also decreased by 3.2 trillion won despite the installment payment reflected in April this year compared to May last year. However, income tax increased by 2.5 trillion won due to increased real estate transactions.

Accordingly, the progress rate of national tax revenue fell by 2.7 percentage points to 34.6% compared to 37.3% in the same period last year.

Total expenditure from January to April was 209.7 trillion won, an increase of 13 trillion won compared to the same period last year. General accounts increased by 10.8 trillion won, special accounts by 2.4 trillion won, and funds by 10.2 trillion won, while 10.4 trillion won decreased due to reductions in local government grants outside revenue and expenditure.

The integrated fiscal balance, calculated by subtracting total expenditure from total revenue, recorded a deficit of 43.3 trillion won cumulatively from January to April. As revenue decreased while spending increased, the deficit widened by 17.5 trillion won compared to the same period last year.

The management fiscal balance, which excludes the four major social security funds from the integrated fiscal balance, recorded a deficit of 56.6 trillion won during the same period, an increase of 17.7 trillion won compared to the previous year. This is the largest deficit for the January to April period since related statistics began in 2011.

As of the end of April, the central government’s national debt stood at 746.3 trillion won, an increase of 14.7 trillion won from March. This was due to increases of 14.6 trillion won and 2 trillion won in the balances of treasury bonds and national housing bonds, respectively.

Out of the 307.8 trillion won in major managed projects by central ministries and public institutions this year, 137.7 trillion won had been executed by the end of April, representing 44.7% of the annual plan.

Meanwhile, the national debt is expected to rise to 840.2 trillion won with the third supplementary budget. This is an increase of 99.4 trillion won compared to last year’s original budget. The national debt-to-GDP ratio, which was expected to be 41.4% during the second supplementary budget, is projected to surge to 43.5% with the third supplementary budget.

The deficit in the integrated fiscal balance is expected to reach 76.4 trillion won, the largest since related statistics began in 1979. The management fiscal balance is also anticipated to record the largest deficit ever at 112.2 trillion won since related statistics started in 2001.

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