Korea's fiscal deficit widens by $6.7 billion in first seven months of year

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Korea's fiscal deficit widens by $6.7 billion in first seven months of year

Published: 12 Sep. 2024, 13:18

SHIN HA-NEE
shin.hanee@joongang.co.kr

Headquarters of the Ministry of Economy and Finance [MINISTRY OF ECONOMY AND FINANCE]

Korea's fiscal deficit expanded by nearly 9 trillion won ($6.7 billion) on year during the first seven months of this year driven by a sharp drop in corporate tax revenue amid growing costs and high interest rates.

The managed fiscal balance posted a deficit of 83.2 trillion won in the January-July period, larger than the shortfall of 67.9 trillion won a year earlier, according to the Ministry of Economy and Finance Thursday.

The managed fiscal balance is a key gauge of fiscal health calculated as the difference between total state revenue and expenditure but excluding the balance of social security funds.

This year's tally was the third-largest figure ever for any cited period. The shortfall hit an all-time high of 98.1 trillion won in 2020 due to the government's cash handouts for people hit by the Covid-19 pandemic.

The total revenue went up by 3.9 trillion won on year to 357.2 trillion won during the cited period this year, led by the increase in nontax income.

However, tax revenue fell 8.8 percent to 208.8 trillion won due to the sharp decrease in the government's collection of corporate taxes on their weak performances.

Total expenditures went up by 18.3 trillion won on year to 409.5 trillion won as the government spent more on various welfare programs, according to the ministry.

The government's debt had reached 1,159.3 trillion won as of the end of July, up 13.4 trillion won from a month earlier, the data showed.

BY SHIN HA-NEE, YONHAP [shin.hanee@joongang.co.kr]