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Korea's deficit hits $68.1 billion, the fourth-highest on record

Published: 14 Aug. 2025, 16:48 Updated: 14 Aug. 2025, 20:05

Apartment complexes in Seoul are shown from Namhan Mountain Fortress in Gyeonggi on Sept. 24. [NEWS1]

Korea’s fiscal deficit reached 94.3 trillion won ($68.1 billion) in the first half of this year — the fourth-largest on record despite narrowing from more than 100 trillion won a year earlier. The shortfall is expected to widen in the second half of this year once the second extra budget is factored in.

Total revenue stood at 320.6 trillion won as of the end of June, up 24.7 trillion won from the same period last year, according to the Finance Ministry’s August edition of its monthly public finance report, released Thursday.

National tax revenue totaled 190 trillion won, an increase of 21.5 trillion won, driven by a 14.4 trillion won rise in corporate tax due to improved company earnings and a 7.1 trillion won increase in income tax resulting from a boom in overseas stock markets and higher bonuses.

Total spending in the first half came to 389.2 trillion won, up 17.3 trillion won from a year earlier. The consolidated fiscal balance recorded a deficit of 68.6 trillion won. Excluding the four major social security funds, including the National Pension Service, the managed fiscal balance — a better indicator of the government’s actual fiscal position — posted a 94.3 trillion won deficit. That is the fourth-largest first-half deficit on record, after 110.5 trillion won in 2020, 103.4 trillion won in 2024 and 101.9 trillion won in 2022.

These figures reflect only the first extra budget passed in May. Once the second extra budget, which was approved on July 4, is included, the second-half managed fiscal balance could worsen further. The government projects that the full-year managed fiscal deficit will reach around 111.9 trillion won, the third-largest in history following 112 trillion won in 2020 and 117 trillion won in 2022, when multiple extra budgets were drawn up in response to the Covid-19 pandemic.

The larger concern is the rising national debt, which will burden future generations. Central government debt stood at nearly 1.22 quadrillion won at the end of June and is projected to climb to more than 1.3 quadrillion won by year-end — an increase of 126.7 trillion won from the end of 2024, the largest annual rise on record. Compared to 2017, the first year of the Moon Jae-in administration, when national debt totaled 660 trillion won, the figure is expected to roughly double.

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
BY JANG WON-SEOK [[email protected]]