Deficit in National Finances Reaches 102.4 Trillion Won from January to September, Second Largest on Record

Largest Deficit Since 2020

As of September this year, the national fiscal deficit exceeded 100 trillion won. This is the second largest cumulative deficit for September since the government began compiling managed fiscal balance data.

According to the “Monthly Fiscal Trends November Edition” released by the Ministry of Economy and Finance on November 13, the managed fiscal balance recorded a deficit of 102.4 trillion won. This is the second largest deficit as of the end of September since the ministry began compiling monthly managed fiscal balance data, following the 108.4 trillion won deficit in September 2020, when three rounds of supplementary budgets were executed due to the pandemic. The managed fiscal balance excludes the four major social security funds, such as the National Pension, to better reflect the government’s actual fiscal condition. The consolidated fiscal balance, which subtracts total expenditures from total revenues, posted a deficit of 63.5 trillion won.

Hwang Heejeong, Director of Fiscal Soundness at the Ministry of Economy and Finance, explained, “There were no major revenue schedules in September, while the scale of fiscal execution increased due to the first and second supplementary budgets. Also, it is typical for the deficit to increase in September and improve in October, so there are no unusual circumstances.” As of the end of September, the national debt (central government debt) stood at 1,259 trillion won, down 1.9 trillion won from the previous month. Hwang added, “This is because the redemption of government bonds increased in September according to the government bond issuance schedule.”

As of the end of October, total revenue reached 480.7 trillion won, up 41.4 trillion won from the same period last year. The increase in total revenue was due to higher national tax revenue, non-tax revenue, and fund revenue. National tax revenue amounted to 289.6 trillion won, a 34.3 trillion won increase year-on-year. As corporate performance improved in the first half of the year, corporate tax collections rose by 21.4 trillion won, and with the expansion of bonus payments and a boom in overseas stock markets, capital gains tax collections increased, leading to a 10.2 trillion won rise in income tax revenue.

Non-tax revenue was 24.7 trillion won, up 2.2 trillion won from the previous year. Fund revenue reached 166.5 trillion won, an increase of 4.9 trillion won year-on-year. In October, the government issued 17.7 trillion won in government bonds. Government bond yields in October rose compared to the previous month, reflecting changes in market expectations regarding monetary policy.

Total expenditures from January to September this year amounted to 544.2 trillion won, an increase of 51.9 trillion won compared to the same period last year. The budget execution rate was 77.4%, 2.4 percentage points higher than a year earlier. The government issued 17.7 trillion won in government bonds in October, bringing the cumulative issuance by October to 205.2 trillion won, which is 88.8% of the annual issuance limit. The October funding rate was 2.68%, up from 2.61% in the previous month, while the bid-to-cover ratio was 262%, down from 264% in September.