South Korea's Jan.-May fiscal deficit hits lowest since 2023

South Korea's fiscal deficit for the first five months of this year came in at around 54 trillion won ($35.8 billion), roughly in line with the same period last year. Total revenue rose sharply on strong tax collection, but spending also increased as the government executed supplementary budget measures, including a victim support fund tied to high oil prices.

Total revenue for January through May reached 330 trillion won, up 50.2 trillion won from the same period last year, according to the Ministry of Planning and Budget's monthly fiscal trends report for July, released Thursday.

Tax revenue came to 199.9 trillion won, up 27.5 trillion won from a year earlier. Income tax rose 9 trillion won, driven by broader bonus payouts and a pickup in real estate transactions, while corporate tax climbed 3.9 trillion won on improved earnings at semiconductor companies and other firms. Value-added tax increased 4.5 trillion won as refunds declined and imports grew, and securities transaction tax rose 4.1 trillion won on higher trading volumes and a partial rate restoration. Fuel tax edged up 400 billion won following a partial rollback of the flexible fuel tax rate.

Total expenditure for January through May reached 353.3 trillion won, up 38.1 trillion won from a year earlier. Key drivers included 4.7 trillion won disbursed from the high oil price victim support fund, 4.5 trillion won in first-half support payments for national health insurance subscribers, 2.5 trillion won in additional local government transfers tied to higher tax revenue, and 2.4 trillion won in expanded national pension outlays reflecting a growing subscriber base.

The consolidated fiscal balance — total revenue minus total expenditure — posted a deficit of 23.4 trillion won, narrowing by 12.1 trillion won from the same period last year. The managed fiscal balance, which excludes social security funds such as the national pension, showed a deficit of 54.2 trillion won, an improvement of 6.8 billion won from a year earlier. The managed fiscal deficit was the smallest for the January-May period since 2023.

Social security funds including the national pension recorded a surplus of 30.8 trillion won, boosted by higher investment returns. The surplus expanded by 12.1 trillion won from a year earlier.

National debt stood at 1,345.2 trillion won as of end-May, up 23.6 trillion won from the previous month. Treasury bond issuance for January through June totaled 124.1 trillion won, or 55.5 percent of the annual issuance ceiling of 225.7 trillion won. Foreign holdings of South Korean Treasury bonds reached 326.8 trillion won at end-June, up 3.8 trillion won from the previous month.