Rapid Increase in Expenditures Including Expanded Unemployment Benefits for COVID-19 Response
Significant Decrease in Tax Revenue
Deficit Expected to Widen Further with Additional Economic Support Measures
[Asia Economy New York=Correspondent Baek Jong-min] The U.S. Treasury Department announced on the 13th (local time) that the federal government deficit reached $864 billion (approximately 1,039 trillion KRW) last month. This is a new record for a monthly deficit, surpassing the $738 billion recorded in April.
The deficit recorded in the first nine months of the 2020 fiscal year, which began on October 1 last year, also reached $2.74 trillion (approximately 3,296 trillion KRW), marking the largest scale to date.
This is due to a decrease in tax revenue while expenditures surged sharply. Cumulative tax revenue through June of this fiscal year amounted to $2.26 trillion (approximately 2,719 trillion KRW), down 13.4% compared to the same period last year. On the other hand, expenditures increased by 49.1%, reaching $5 trillion (approximately 6,015 trillion KRW). The expansion of unemployment benefits due to COVID-19 is cited as a reason for the increased deficit.
The U.S. Congressional Budget Office (CBO) projected that if the current trend continues, the total deficit for this fiscal year will reach $3.7 trillion (approximately 4,451 trillion KRW), far exceeding the previous annual deficit record of $1.4 trillion set in 2009, right after the global financial crisis.
With the U.S. government and Congress pushing for additional COVID-19 economic support measures, the annual fiscal deficit is expected to increase further.
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