Fiscal deficit shrunk in third quarterKorea’s cumulative fiscal deficit in the first nine months of this year shrank from that of the January-June period’s as government spending decreased, the Ministry of Strategy and Finance said yesterday.
Despite the decline, however, this year’s fiscal deficit is still expected to be more than 20 trillion won ($18.9 billion), remaining in the red for the sixth consecutive year.
According to the Finance Ministry yesterday, the country’s cumulative fiscal deficit at the end of September was 29 trillion won, a drop from 46.2 trillion won in the first six months of the year.
The shrinkage of the deficit from the first six months to the first nine months is the largest since 2010 when the deficit over the same period was reduced by 12.9 trillion won. This year, the deficit shrank by 17.2 trillion won.
“Compared to last year, Korea saw its fiscal account improve in the first nine months of the year compared to the first six months,” said a ministry official. “This is because tax revenues declined at a much slower pace while expenditures also dropped.”
As of September, the government’s total revenue was 236 trillion won while its expenditures were 238.1 trillion won. Its consolidated fiscal balance including social security was minus 2.1 trillion won. When excluding social security funds, the deficit was 29 trillion won. That figure is a drop from 46.2 trillion won as of June.
In the first half of the year, the government earned 153.9 trillion won in revenue and spent 182.5 trillion won. Its fiscal balance including social security funds was 28.6 trillion won; without them, it was 46.2 trillion won.
The fiscal account that excludes social security funds - including national pensions and employment pensions - is considered a more accurate gauge of a country’s fiscal soundness.
Although the government’s fiscal soundness has improved with the year-end approaching, its consolidated fiscal deficit is still expected to reach more than 20 trillion won. The budget has been in deficit since 2008 with a drop in tax revenues amid a sluggish economy. In 2009, the deficit mounted to 43.2 trillion won, up from 11.7 trillion won the previous year.
BY LEE EUN-JOO [firstname.lastname@example.org]