Fiscal deficit hits 56.3 trillion won in first seven months of year

Finance Minister Choo Kyung-ho speaks during a parliamentary session on Thursday in southern Seoul. [JOINT PRESS CORPS]

The fiscal deficit continues to grow despite higher tax revenue.

According to the Finance Minister on Thursday, in the first seven months of the year, the deficit was 56.3 trillion won ($40.4 billion), up 170 percent on year.

When excluding the four social insurance programs, the deficit was 86.8 trillion won, up 52 percent.

The Finance Ministry expects the deficit to total 110.8 trillion won this year.

This was largely due to higher spending. Spending rose 19 percent year-on-year to 450.4 trillion won in the first seven months.

Total government income including tax revenue increased 10 percent to 394 trillion won.

In taxes, the government collected 261 trillion won in the first seven months, a 16.6 percent increase year-on-year.

Corporate tax revenue rose 57 percent to 65.6 trillion won.

Income tax revenue rose 13 percent year-on-year to 80.7 trillion won. Value-added tax revenue rose 9.6 percent to 57.3 trillion won.

The national debt, which broke 1,000 trillion won in April, continued to grow. In July, it hit 1,022 trillion won.

"Due to spending including the supplementary budgets, the fiscal deficit has worsened," said a Finance Ministry official. "In July, we started to see an improvement due to spending cutbacks."

Finance Minister Choo Kyung-ho again raised the need for a fiscal rule when appearing in front of lawmakers at the National Assembly on Thursday.

"We have tried to design the budget with a goal of soundness," Choo said. "Korea and Turkey are the only two countries in the OECD that don't have a fiscal rule, as I understand."

On Tuesday, the government announced a proposal that would cap the fiscal deficit at 3 percent of the GDP.

Choo said the government will immediately implement this rule for the 2024 budget once the legislators approve.

The administration signaled a move toward fiscal discipline, an about-face from the spendthrift ways of the previous administration, with the first drop in spending in 13 years when it proposed the 2023 budget in August.

BY LEE HO-JEONG [lee.hojeong@joongang.co.kr]