S. Korea's fiscal deficit tops $90 bn; public debt hits record high

South Korea's fiscal deficit in September has pushed the annual shortfall to over 100 trillion won ($89.6 billion) with public debt reaching an all-time high, according to the Ministry of Economy and Finance. 

The September fiscal deficit came to 12.4 trillion won, widening the yearly deficit to 108.4 trillion won, while public debt exceeded 800 trillion won for the first time ever due to increased spending against shrinking tax revenue from companies.

Corporate tax revenue has posted a negative streak for three straights months from July. Companies' cumulative tax revenue from January to September stood at 50 trillion won, down 15.8 trillion won from the year-earlier period.

The downward trend is owing to companies' unfavorable earnings from last year, which are used to calculate this year's tax. Also, the global pandemic has delivered a heavy blow to many businesses, hindering interim prepayments.

The drop in corporate tax revenue has made it difficult for the country's overall national tax income to recover to last year's levels. In the January to September period, the national tax income stood at 214.7 trillion won, down 13.4 trillion won from the same period last year.

Amid the overall downtrend, the national tax income and non-tax income for September rose by 3.6 trillion won and 100 billion won, respectively, compared to the same period last year.

Meanwhile, government expenditure has seen the largest-ever growth trend this year as total spending rose by 48.8 trillion won in the January to September period compared to a year earlier due to the enforcement of four supplementary budgets.

“The national debt and fiscal balance will be managed based on the fourth supplementary budget by the year end,” an official from the finance ministry said.

Based on the fourth supplementary budget of 7.8 trillion won, this year’s national debt is expected to climb to 846.9 trillion won alongside the fiscal deficit's expected rise to 118.6 trillion won.

Write to Jin-gyu Kang at josep@hankyung.com
Danbee Lee edited this article.