Impact of Insufficient Tax Revenue... 54 Trillion Deficit in National Budget for Q1

Ministry of Economy and Finance May Monthly Fiscal Trends
Widening Deficit in Managed Fiscal Balance
24 Trillion Won Less National Tax Revenue Amid Recession
Central Debt at 1,053 Trillion Won, 20 Trillion Higher

The national budget deficit for the first quarter surpassed 50 trillion won. Despite significantly reducing expenditures, income decreased even more due to worsening revenue conditions caused by the economic recession. The debt burden borne by the central government reached the 1,053 trillion won range, about 20 trillion won more than last year.

According to the Monthly Fiscal Trend report published by the Ministry of Economy and Finance on the 11th, the managed fiscal balance for the first quarter was recorded as a deficit of 54 trillion won. The managed fiscal balance excludes social security funds from the integrated fiscal balance and is an indicator showing the overall national budget. The managed fiscal balance started with a surplus of 7.3 trillion won in January, turned to a deficit of 30.9 trillion won in February, and the deficit widened through March.

The integrated fiscal balance, which is total revenue minus total expenditure, also showed a deficit of 41.4 trillion won. Like the managed fiscal balance, it had a surplus of 10.3 trillion won in January but turned to a deficit from February onward.

The expansion of the deficit size was due to tax revenue being collected less than expected. Total revenue for the first quarter was 145.4 trillion won, a decrease of 25 trillion won compared to the same period last year. Among this, national tax revenue decreased by 24 trillion won to 87.1 trillion won. The decrease was the largest ever recorded for March, and even if the same amount of tax is collected for the remaining nine months as last year, there will be a shortfall of about 30 trillion won. In particular, corporate tax revenue was 24.3 trillion won, making it practically difficult to achieve this year’s target of 105 trillion won.

The Ministry of Economy and Finance explained, “Considering the base effect due to the decrease in deferred tax revenue from tax support, national tax revenue effectively decreased by 14.3 trillion won,” and added, “Corporate tax decreased due to last year’s decline in corporate operating profits and the base effect of deferred tax revenue.”

Total expenditure decreased by 16.7 trillion won to 186.8 trillion won during the same period. As the increase in COVID-19 cases eased, related crisis response projects were reduced, saving 5.1 trillion won in the budget sector. In the fund sector, expenditures were cut by 11.6 trillion won due to the end of loss compensation for small business owners.

Central government debt increased by 20.2 trillion won from 1,033.4 trillion won at the end of 2022 to 1,053.6 trillion won in March. However, it was 1,053.6 trillion won, 7.4 trillion won less than the previous month. In March, government bond maturity repayments were made, and since the repayment amount (24.8 trillion won) exceeded the issuance amount (17.8 trillion won), the debt slightly decreased.

The scale of government bond issuance in April was 17.9 trillion won, reaching 15.3 trillion won based on competitive bidding. The issuance volume from January to April was about 63.9 trillion won, which is 38% of the annual total issuance limit.

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