First Half Fiscal Deficit Hits 94.3 Trillion Won, Fourth Largest on Record

Fiscal Deficit Hits 94.3 Trillion Won in First Half
Fourth Largest on Record;
Deficit Expected to Widen Further with Second Supplementary Budget

In the first half of this year, the national fiscal deficit amounted to 94.3 trillion won. Although this is a reduction compared to last year, when the deficit exceeded 100 trillion won, it still marks the fourth largest deficit on record. With the inclusion of the second supplementary budget, the deficit is expected to increase further in the second half of the year.

According to the August edition of the "Monthly Fiscal Trends" released by the Ministry of Economy and Finance on August 14, cumulative total revenue as of the end of June stood at 320.6 trillion won, an increase of 24.7 trillion won compared to the same period last year. The execution rate compared to the budget (including the first supplementary budget) was 49.1%, which is 0.7 percentage points lower than the 49.8% recorded in the same period last year based on the final settlement.

By category, national tax revenue increased by 21.5 trillion won to reach 190 trillion won. Corporate tax rose by 14.4 trillion won due to improved business performance, while income tax increased by 7.1 trillion won, driven by the boom in overseas stocks and expanded bonuses. Non-tax revenue rose by 2.9 trillion won to 19.4 trillion won. Fund revenue also increased by 400 billion won, totaling 111.2 trillion won.

Total expenditure from January to June this year increased by 17.3 trillion won to reach 389.2 trillion won. Budget spending, mainly from the general account (219.4 trillion won), rose by 15.1 trillion won, totaling 277.2 trillion won. Fund expenditure increased by 2.4 trillion won to 111.9 trillion won. The execution rate compared to the budget was 56.6%, which is 1.6 percentage points lower than the previous year.

The consolidated fiscal balance, calculated by subtracting total expenditure from total revenue, showed a cumulative deficit of 68.6 trillion won as of the end of June. The managed fiscal balance, which reflects the actual state of national finances by excluding the four major social security funds (including the National Pension) from the consolidated fiscal balance, recorded a deficit of 94.3 trillion won. This represents an improvement of 7.4 trillion won and 9.1 trillion won, respectively, compared to the previous year.

However, the size of the managed fiscal deficit remains the fourth largest on record, following 2020 (110.5 trillion won), last year (103.4 trillion won), and 2022 (101.9 trillion won). Hwang Heejeong, Director of Fiscal Soundness at the Ministry of Economy and Finance, explained, "In June this year, the deficit was relatively large because major revenues were not collected and there was rapid execution in the first half." The cumulative execution amount of the first supplementary budget from May to June was 7.7 trillion won.

If the second supplementary budget, which was passed on July 4, is reflected, the managed fiscal balance is expected to worsen further in the second half of the year. The government has set a target to execute more than 85% of the second supplementary budget by the end of September. The government forecasts that, including the second supplementary budget, the managed fiscal deficit this year will reach around 111.6 trillion won.

As of the end of June, the national debt (central government debt) stood at 1,218.4 trillion won. This is close to the figure at the time of the first supplementary budget (1,246.1 trillion won). The amount of government bonds issued last month was 21.2 trillion won. While government bond yields faced some upward pressure due to rising global interest rates, including those in the United States, the inflow of bargain hunters helped maintain stable market conditions.