Korea’s fiscal deficit exceeded 100 trillion won ($73 billion) in the first nine months of the year, the second-largest shortfall on record for the period, as heavy spending tied to two supplementary budgets outpaced gains in tax revenue, government data showed Thursday.
The Finance Ministry’s November fiscal report showed the managed fiscal balance, a key gauge that strips out the four major social security funds, posted a 102.4 trillion-won deficit through September.
The shortfall is second only to 2020, when three rounds of COVID-19 pandemic extra budgets pushed the deficit to 108.4 trillion won.
Because September contains no major tax-collection events, the ministry said the fiscal balance tends to worsen in that month before improving in October.
“The pattern is typical, and there are no unusual factors,” a senior ministry official said.
The government still expects the deficit to converge toward its year-end target of around 111.6 trillion won.
Much of this year’s widening stemmed from stepped-up execution of two extra budgets totaling more than 42 trillion won.
Korea’s first supplementary budget, approved in April, amounted to 12.2 trillion won to support disaster relief and trade recovery.
A larger 30.5 trillion-won package in June, the first under the new administration, focused on reviving domestic consumption and providing 10.3 trillion won in cash assistance and small-business support through a consumption-voucher program. The remainder was allocated to industry competitiveness and other projects.
The consolidated fiscal balance, which reflects total revenue minus total spending, showed a 63.5 trillion won deficit in the Jan.–Sept. period.
Total revenue through October rose 41.4 trillion won from a year earlier to 480.7 trillion won, driven by broad increases in national taxes, non-tax revenue and fund income.
National tax revenue reached 289.6 trillion won, up 34.3 trillion won, with corporate taxes increasing 21.4 trillion won on better earnings and income taxes rising 10.2 trillion won on higher bonuses, stronger employment and gains from overseas stock investments.
Non-tax revenue increased 2.2 trillion won to 24.7 trillion won, while fund income rose 4.9 trillion won to 166.5 trillion won.
Total government spending climbed 51.9 trillion won to 544.2 trillion won, reflecting the accelerated rollout of the two supplementary budgets. Spending progress reached 77.4 percent of the annual plan, up from a year earlier.
Government debt stood at 1,259 trillion won at the end of September, down 1.9 trillion won from August due to reduced Treasury issuance that month.
The government issued 17.7 trillion won in Treasuries in October, with yields rising as markets adjusted expectations for monetary policy. Cumulative issuance from January to October reached 205.2 trillion won, or 88.8 percent of the annual borrowing ceiling.
The average funding rate rose to 2.68 percent from 2.61 percent in September, while the bid-to-cover ratio eased slightly to 262 percent.
Foreign investors held 280.6 trillion won of Korean Treasury bonds as of October, up 1.1 trillion won from the previous month, the ministry said. Their share of total outstanding government bonds slipped to 24.1 percent, down 0.1 percentage point from September.
hnpark@heraldcorp.com
