Starting with a Deficit in National Finances... Managed Fiscal Balance Shows Deficit for Two Consecutive Januarys

Publication of March Fiscal Trends... Integrated Fiscal Balance Surplus by Subtracting Total Expenditure from Total Revenue
National Tax Revenue Increases by 2.4 Trillion Won... Expenditure Rises Further

[Sejong=Asia Economy Reporter Son Seonhee] The management fiscal balance, which shows the financial status of the national budget, recorded a deficit from the beginning of the year. It marked a negative balance in January for two consecutive years following the COVID-19 outbreak last year.

According to the "Monthly Fiscal Trend March Issue" released by the Ministry of Economy and Finance on the 9th, the management fiscal balance recorded a deficit of 1.8 trillion KRW in January this year. The management fiscal balance excludes the social security fund (a surplus of 5.3 trillion KRW), and the integrated fiscal balance (total revenue - total expenditure), including this fund, showed a surplus of 3.4 trillion KRW.

The management fiscal balance, which excludes funds and reflects the actual fiscal operation status, typically records a surplus at the beginning of the year and then shifts to a deficit after the government’s fiscal execution intensifies. However, last year, due to the COVID-19 outbreak at the beginning of the year, a deficit of 1.7 trillion KRW occurred in January. This was the first January deficit since the 2009 global financial crisis. This year also recorded a deficit at the beginning of the year for the second consecutive year, with the deficit increasing by 100 billion KRW.

Total revenue in January this year was 57.3 trillion KRW, an increase of 6.1 trillion KRW compared to the same period last year. Excluding the increase in fund revenue (3.6 trillion KRW), national tax revenue increased by 2.4 trillion KRW. This is analyzed to be due to active housing transactions and fund redemptions at the end of last year, which led to higher collections of related capital gains tax and dividend income tax. During the same period, corporate tax also increased by 400 billion KRW to 2 trillion KRW, and other national taxes such as comprehensive real estate tax and securities transaction tax increased by 1 trillion KRW to 5.2 trillion KRW. Total expenditure was 53.9 trillion KRW, an increase of 2.9 trillion KRW compared to the same period last year.

An official from the Ministry of Economy and Finance explained, "Although the management fiscal balance recorded a deficit in January, it is seen as a continuation of the trend that has persisted since last year following the COVID-19 outbreak. Government spending increased due to COVID-19 response, but national tax revenue also increased due to income tax and others, resulting in a surplus in the integrated fiscal balance."

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