Tax Revenue Increased but Debt Piled Up Further... Government Finances Ran a 90 Trillion Won Deficit in January–November Last Year

[Financial News] Despite an increase in national tax revenue, the fiscal balance deteriorated. Thanks to strong corporate and income tax receipts, revenue conditions improved, but an expansion in transfer spending offset this, pushing the managed fiscal balance deficit to nearly 90 trillion won.
According to the January issue of the Monthly Fiscal Trends released by the Ministry of Planning and Budget on the 15th, cumulative total revenue as of the end of November last year stood at 581.2 trillion won, up 39.2 trillion won from the same period a year earlier. This represents 90.5% of the annual budget execution rate. Of this, national tax revenue amounted to 353.6 trillion won, an increase of 37.9 trillion won from a year earlier. The execution rate was 95.0%, outpacing the overall budget execution speed.
Corporate tax and income tax led the increase in national taxes. Reflecting improved corporate earnings in 2024 and in the first half of last year, corporate tax revenue rose by 22.2 trillion won year-on-year. Income tax revenue also increased by 12.3 trillion won, driven by higher wage income, larger performance bonuses, and increased capital gains from overseas stock transactions. In contrast, value-added tax declined slightly due to higher refunds, and securities transaction tax revenue fell as a result of lower tax rates.
Non-tax revenue also grew. Cumulative non-tax revenue through November reached 28.4 trillion won, up 2.3 trillion won from the same period a year earlier.
The problem lies on the spending side. Cumulative total expenditures through November came to 624.4 trillion won, an increase of 54.3 trillion won from a year earlier. The execution rate was 88.8%. By type, transfer spending drove the increase, rising by 55.3 trillion won. Transfer spending refers to income transfers that are paid without any corresponding production activity or consideration.
As a result, the consolidated fiscal balance recorded a deficit of 43.3 trillion won. Excluding a 46.3 trillion won surplus in social security funds, the managed fiscal balance showed a deficit of 89.6 trillion won, with the deficit widening by 8.3 trillion won from the same period a year earlier. In other words, fiscal soundness indicators deteriorated despite the improvement in revenue conditions.
National debt is also rising rapidly. As of the end of November, central government debt stood at 1,289.4 trillion won, up 14.1 trillion won from the previous month. Compared with the end of the previous year, it had surged by as much as 148.3 trillion won.
Government bond issuance in December amounted to 5.4 trillion won, bringing total issuance for the year to 226.2 trillion won, nearly 98% of the annual ceiling. Yields on three-year bonds fell in the short term, but long-term yields, including 10-year bonds, moved higher. The balance of government bonds held by foreign investors increased by 3.7 trillion won in December alone.


hippo@fnnews.com Kim Chan-mi Reporter