January?July Fiscal Deficit Hits 86.8 Trillion Won... Third Largest on Record

The national fiscal deficit for the period from January to July this year reached 86.8 trillion won. This is the third largest deficit on record, following 2020 and 2022. Since the execution of the second supplementary budget began in July, the deficit is expected to increase further depending on how the budget is spent going forward.

원본보기 아이콘

According to the "Monthly Fiscal Trends September Edition" released by the Ministry of Economy and Finance on September 11, total revenue for January to July this year was 385 trillion won, an increase of 27.8 trillion won compared to the same period last year. This is the first fiscal report reflecting the execution of the second supplementary budget, with a budget execution rate of 59.9%, which is 0.2 percentage points lower than the 60.1% recorded in the same period last year based on final accounts.

By category, national tax revenue was 232.6 trillion won, up 23.8 trillion won. Corporate tax collections increased by 14.5 trillion won, and income tax rose by 9 trillion won. In contrast, value-added tax decreased by 1.5 trillion won. Non-tax revenue and fund revenue increased by 2.7 trillion won and 1.4 trillion won respectively, reaching 21.2 trillion won and 131.2 trillion won.

Total expenditure for January to July this year was 442.5 trillion won, an increase of 33 trillion won. The execution rate was 62.9%, which is 1.3 percentage points lower than the same period last year. Expenditure from the general account, centered at 253.8 trillion won, increased by 26.3 trillion won, and fund expenditure rose by 4.1 trillion won to 127.2 trillion won.

The consolidated fiscal balance, which is total revenue minus total expenditure, showed a deficit of 57.5 trillion won. The managed fiscal balance, which subtracts the four major social security funds (including the National Pension) from the consolidated fiscal balance and is considered a more accurate indicator of the national finances, recorded a deficit of 86.8 trillion won. Although this is an improvement from the previous month (-94.3 trillion won), it is an increase compared to the same period last year (-83.2 trillion won). The social security fund balance posted a surplus of 29.3 trillion won.

As of the end of July, the cumulative managed fiscal deficit was the third largest on record, following the COVID-19 pandemic years of 2020 (98.1 trillion won) and 2022 (86.83 trillion won). Since the effects of the second supplementary budget have only just begun to be reflected, the deficit could widen further depending on future execution. A Ministry of Economy and Finance official explained, "Since the entire second supplementary budget was not reflected in July's expenditures, the managed fiscal balance for July alone shows a surplus."

The national debt (central government debt) stood at 1,240.5 trillion won at the end of July, an increase of 22.1 trillion won from the previous month. This is 26.7 trillion won lower than the figure projected in the second supplementary budget (1,267.2 trillion won).

The amount of government bonds issued last month was 21 trillion won. Due to fluctuations in global interest rates in the United States and Europe, short-term interest rates fell compared to the previous month, while long-term rates rose. As of the cumulative total for August, government bond issuance stood at 166 trillion won, which is 72.3% of the annual issuance limit. The funding rate last month was 2.55%, down 0.0 percentage points from the previous month.

© The Asia Business Daily(www.asiae.co.kr). All rights reserved.