Due to Revenue Shortfall... Fiscal Deficit Already Exceeds 30 Trillion Won by February This Year (Comprehensive)

April Monthly Fiscal Trends
Slow Economic Recovery and Asset Market Slump Impact
Progress Rate 14.4%... Down 2.8%P
February Tax Revenue Short by 16 Trillion Won

As of February this year, the government's managed fiscal deficit, which reflects the actual fiscal condition, has exceeded 30 trillion won. This is due to a decrease of more than 16 trillion won in total government revenue in February compared to the same period last year, amid growing concerns about tax revenue shortages caused by the economic downturn.

According to the Monthly Fiscal Trend report published by the Ministry of Economy and Finance on the 13th, the cumulative managed fiscal balance for February recorded a deficit of 30.9 trillion won, widening the deficit by 10.9 trillion won compared to the same period last year.

The integrated fiscal balance, including the four major social security funds such as the National Pension, also showed a deficit of 24.6 trillion won, with the deficit expanding by 9.5 trillion won year-on-year.

The cumulative total revenue for February stood at 90 trillion won as both national tax and non-tax revenues decreased. Total revenue in February last year was 106.1 trillion won. National tax revenue recorded 54.2 trillion won, marking the largest-ever decline of 15.7 trillion won. The Ministry of Economy and Finance explained that considering the base effect due to tax support measures, the actual decrease was about 6.9 trillion won.

Non-tax revenue was 5.5 trillion won, shrinking by 3.4 trillion won. This was influenced by the reduction in the Bank of Korea surplus remittance to the government, which dropped from 5.5 trillion won last year to 1.8 trillion won this year, a decrease of 3.7 trillion won.

The progress rate is also sluggish. The national tax revenue progress rate was 13.5%, 4.2 percentage points lower than 17.7% in February last year. It is also lower than the five-year average progress rate for February (16.9%) and is the lowest since February 2006. Non-tax revenue also fell sharply from 28.9% to 22.1%. This means the speed of tax collection is slowing down.

As a result, concerns are emerging that a ‘tax revenue shortage’ could materialize this year. Even if the same amount of national tax revenue as last year is collected from next month, it will fall short of the revenue budget by tens of trillions of won. Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho also stated on the 7th that “there is a high possibility that tax revenue this year will be less than initially budgeted.”

The causes cited include slow economic recovery and asset market stagnation. A Ministry of Economy and Finance official explained, “The economy is not recovering as quickly as expected,” adding, “The progress rate is being significantly affected by problems in the real estate and stock markets.” This means that the sharp decline in housing sales volume and stock trading volume has worsened the revenue collection environment. The official further forecasted, “Securities transaction tax is expected to recover naturally, but it is uncertain whether capital gains tax will improve.”

Total expenditure in February was 114.6 trillion won, down 6.6 trillion won compared to the same period last year. In the budget sector, basic pension and parental pension each increased by 400 billion won, and the special grant for local extinction response was increased by 1 trillion won. However, due to the impact of temporary support measures such as ‘small business loss compensation and quarantine support funds’ provided last year, the fund sector decreased by 10.4 trillion won.

Meanwhile, central government debt increased by 14 trillion won from the previous month to 1,061.3 trillion won.

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