Fiscal Balance Surplus of 8.3 Trillion Won
Possibility of Fiscal Deficit Turn in February
As of January, total revenue reached 67.1 trillion won, the highest level since related statistics began to be compiled. This increase was due to higher consumption, which led to increased VAT and insurance premium revenues, resulting in a significant rise in fund income. The managed fiscal balance, which reflects the state of the national finances, recorded a surplus of 8.3 trillion won. However, this is attributed to seasonal characteristics, and there is a high possibility of returning to a deficit from next month.
According to the "Monthly Fiscal Trends" March issue released by the Ministry of Economy and Finance on the 14th, the cumulative total revenue at the end of January was 67.1 trillion won, an increase of 5.7 trillion won compared to the same period last year. The progress rate rose by 1.2 percentage points year-on-year to 11.0%.
The cumulative total revenue at the end of January is the highest amount since the related statistics began in 2014. This was largely due to increases in all components of total revenue: national taxes, non-tax revenue, and fund income. National tax revenue amounted to 45.9 trillion won, up 3 trillion won from the same period last year. Income tax increased by 600 billion won due to a rise in the number of employed persons and interest rates, and VAT increased by 2.3 trillion won due to increased private consumption in the fourth quarter of last year. Non-tax revenue also rose by 400 billion won year-on-year to 2.4 trillion won. Fund income recorded 18.8 trillion won, an increase of 2.3 trillion won compared to the previous year, supported by a 1.3 trillion won increase in insurance premium income.
However, the Ministry of Economy and Finance explained that the progress rate of total revenue is not significantly different from the levels of recent years. Han Joo-hee, Director of Fiscal Soundness, stated, "Total revenue should be viewed not only by amount but also by progress rate. While the amount is the highest ever, the progress rate is at an average level."
Total expenditure recorded 55.9 trillion won, an increase of 4.8 trillion won compared to the same period last year. This was mainly due to transfer payments, which account for a large portion of total expenditure, increasing by 5.1 trillion won year-on-year to 45 trillion won. Government transfer payments refer to money or goods provided without any reciprocal benefit, related to welfare projects such as basic livelihood security. The progress rate rose by 0.5 percentage points year-on-year to 8.5%.
Since total expenditure increased less than total revenue, the integrated fiscal balance, which is total revenue minus total expenditure, recorded a surplus of 11.2 trillion won, an improvement of 1 trillion won compared to the same period last year. Excluding the surplus of the social security fund balance (2.9 trillion won) from the integrated fiscal balance, the managed fiscal balance recorded 8.3 trillion won, also an improvement of 1 trillion won year-on-year.
From February, this trend is likely to reverse. A ministry official said, "Usually, VAT revenue comes in January, so since the compilation of fiscal trend statistics in 2014, most Januarys have recorded a surplus. Looking at past trends, deficits have occurred from February onward." The government forecasts an annual managed fiscal balance deficit of 91.6 trillion won this year.
The issuance of government bonds in February amounted to 17.5 trillion won, bringing the cumulative issuance of government bonds for the month to 29.9 trillion won. This represents 18.9% of the annual total issuance limit, but the Ministry of Economy and Finance explained that this is not an especially high level. Foreign net investment in government bonds was positive for the second consecutive month in February.
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