South Korea's national debt increased by 44.3 trillion won ($32.8 billion) in the first two months of this year, while the government's fiscal deficit improved compared to last year as revenue growth outpaced spending increases.
According to the "Monthly Fiscal Trends April Edition" released by the Ministry of Economy and Finance on April 9, central government debt stood at 1,312.5 trillion won at the end of February, up 26.5 trillion won from the previous month and 44.3 trillion won higher than the end of last year.
Most of the increase came from government bond issuance to cover the deficit, amounting to 39.6 trillion won. The outstanding balance of government bonds rose to 1,200.9 trillion won.
The fiscal balance showed improvement, supported by recovering tax revenues. Cumulative total revenue through February reached 121.6 trillion won, up 18.6 trillion won year-on-year, with national taxes, non-tax revenue, and fund income all increasing.
Cumulative national tax revenue through February totaled 71 trillion won, up 10 trillion won from the same period last year. This was driven by increases in earned income tax and capital gains tax, as well as strong value-added tax receipts from higher imports. Securities transaction tax also contributed, rising 1.2 trillion won due to expanded stock trading volumes and higher tax rates.
Total spending during the same period was 128.7 trillion won, up 12 trillion won. As a result, the consolidated fiscal balance, which is total revenue minus total expenditure, recorded a deficit of 7.1 trillion won.
The managed fiscal balance, which excludes the surplus from the four social security funds including the National Pension Service (6.9 trillion won surplus) and reflects the actual state of government finances, posted a deficit of 14 trillion won. While this marks the 10th largest deficit on record, the deficit narrowed by 3.9 trillion won year-on-year thanks to revenue growth outpacing expenditure increases, showing signs of improvement.
Meanwhile, the government bond market experienced heightened volatility amid external uncertainties. Geopolitical risks in the Middle East and inflation concerns pushed government bond yields higher in March, while foreign investors recorded net outflows of 7 trillion won during the month, slowing market momentum.