Seoul: South Korea's fiscal deficit surpassed 100 trillion won (US$68 billion) last year, primarily due to a shortfall in tax revenue driven by a sharp decline in corporate income tax collections, the finance ministry said Tuesday. The government's fiscal balance, excluding surpluses from major social security funds, such as the National Pension, recorded a deficit of 104.8 trillion won in 2024, according to the ministry's annual settlement report. This marks a significant increase compared with the initial budget deficit estimate of 91.6 trillion won.
According to Yonhap News Agency, it also marks the first time since 2022 that the fiscal deficit has exceeded 100 trillion won. The ratio of the fiscal deficit to real gross domestic product (GDP) also widened last year, exceeding 4 percent once again since the COVID-19 pandemic, the ministry added.
"If revenue falls, we can prevent a deterioration in the fiscal balance by cutting expenditures," said Park Bong-yong, a finance ministry official. "Despite the drop in revenue, the government continued funding projects aimed at improving people's livelihoods, which contributed to the increase in the fiscal deficit."
The ousted Yoon Suk Yeol administration had previously pledged to keep the fiscal deficit within 3 percent of the GDP, but the fiscal balance has worsened since he took office. The outlook for this year remains uncertain, largely due to external factors, such as the ongoing trade war under the U.S. administration and domestic political instability, raising concerns over a continued shortfall in tax revenue for the third consecutive year.
The annual settlement report, approved by the Cabinet on Tuesday, will be submitted to the National Assembly after being reviewed by the state audit agency.