The national budget posted a deficit of 39.6 trillion won through the first quarter this year, the smallest shortfall in six years. The gap narrowed as tax revenue such as income and corporate taxes increased on the back of a robust semiconductor cycle.
According to the Monthly Fiscal Trends May issue that the Ministry of Planning and Budget released on the 14th, the consolidated fiscal balance without social security fund for January to March recorded a deficit of 39.6 trillion won. The shortfall narrowed by 21.7 trillion won from a year earlier (a 61.3 trillion won deficit). The cumulative first-quarter deficit was the smallest since 2020 (55.3 trillion won).
The consolidated fiscal balance without social security fund reflects the government's actual finances. It is calculated by subtracting the size of the four major social security funds, such as the National Pension and employment insurance, from the consolidated fiscal balance, which is total revenue minus total expenditure.
With taxes being collected well, total revenue increased. Cumulative total revenue for January to March was 188.8 trillion won, up 28.9 trillion won from a year earlier. A Ministry of Planning and Budget official said, "Earned income tax rose sharply due to higher performance bonuses stemming from strong results at semiconductor corporations such as Samsung Electronics and SK hynix, and corporate tax also increased," adding, "As real estate transaction volume grew, capital gains tax and others also expanded." The official also noted that fund revenue increased thanks to higher investment returns at the National Pension.
Total expenditure was also modest during the same period. Cumulative total expenditure for January to March increased by 1.7 trillion won to 211.6 trillion won. In particular, the execution rate of total expenditure was 29.1%, the lowest in eight years since 2018 (28.7%). On this, a Ministry of Planning and Budget official said, "Last year and the year before, there was an emphasis on encouraging front-loaded spending early in the year," adding, "We accepted criticism that early first-half execution leads to burdensome temporary borrowing, and decided not to do so this year."
Meanwhile, the balance of central government debt stood at 1,303.5 trillion won, down 9 trillion won from a year earlier.