Despite Collecting 41 Trillion More in Taxes This Year, National Budget Faces 85 Trillion Deficit

Ministry of Economy and Finance Announces 'Monthly Fiscal Trends October Issue'

[Asia Economy Sejong=Reporter Kwon Haeyoung] Although tax revenue has increased by 41 trillion won compared to last year, the government's fiscal deficit has expanded to 85.3 trillion won due to a significant rise in total expenditures. Unlike the current account balance, which turned to a deficit in August, the managed fiscal balance barely recorded a surplus. However, concerns remain over the realization of the "twin deficits"?both fiscal and current account deficits?that burden the economy.

According to the "Monthly Fiscal Trend October Issue" released by the Ministry of Economy and Finance on the 13th, the government's managed fiscal balance recorded a deficit of 85.3 trillion won from January to August this year. The managed fiscal balance, which subtracts the balances of the four major social security funds from the integrated fiscal balance (total government revenue minus total expenditure), is an indicator that reflects the actual state of national finances. The deficit widened by 15.1 trillion won compared to last year.

As of August, the managed fiscal balance recorded a surplus of 1.5 trillion won, narrowly avoiding a deficit. This narrowly averted a situation where a fiscal deficit would occur simultaneously in the same month following the current account deficit turning negative due to worsening trade balance in August.

Initially, national tax revenue from January to August increased by 41 trillion won compared to the previous year, driven by rises in income tax, corporate tax, and value-added tax. However, total expenditures increased by 62 trillion won during the same period, outpacing the growth in revenue. Government total revenue from January to August was recorded at 438.6 trillion won, up 41.1 trillion won, but total expenditures also rose to 489.3 trillion won, an increase of 62 trillion won.

A Ministry of Economy and Finance official explained, "Total expenditures increased due to local allocation tax and grants, COVID-19 crisis response projects, and payments of loss compensation to small business owners," adding, "We plan to manage the fiscal balance within the planned scope until the end of the year."

The expansion of the fiscal deficit also increased national debt. Central government debt rose by 8.7 trillion won in one month, reaching 1,030.7 trillion won.

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