An employee organizes 50,000 won ($35) bills at Hana Bank in Jung District, central Seoul on Feb. 24.NEWS1
Korea's fiscal deficit narrowed to its lowest level in three years in the first half of 2026, helped by stronger tax revenue, according to the Ministry of Planning and Budget on Thursday.
The government collected 381.9 trillion won ($270 billion) in total revenue from January through June, up 61.3 trillion won from the same period last year, according to an August report on fiscal trends released Thursday by the ministry.
The increase was largely driven by taxes, which rose 33 trillion won from a year earlier in the first half.
Income tax revenue increased by 10.4 trillion won, helped by higher taxes on wages amid increased performance bonuses and higher capital gains tax revenue as real estate transactions increased.
Value-added tax revenue rose by 4.9 trillion won due to higher imports and fewer tax refunds, while corporate tax revenue increased by 4.3 trillion won on improved corporate earnings.
Securities transaction tax revenue increased by 5.2 trillion won amid a sharp rise in stock trading and the restoration of previous tax rates. Transportation tax revenue rose by 300 billion won, partly as the government scaled back temporary fuel tax cuts.
Nontax revenue totaled 28.4 trillion won in the first half, up 9 trillion won from a year earlier, while revenue from government-managed funds rose 19.3 trillion won to 130.6 trillion won.
The National Tax Service's office in SejongNEWS1
Total government spending reached 425.8 trillion won during the same period, an increase of 36.6 trillion won from a year earlier.
The ministry attributed the increase partly to 4.8 trillion won in support for national health insurance subscribers, an additional 5.1 trillion won in transfers to local education finances resulting from higher tax revenue and 4.7 trillion won in assistance related to high oil prices.
The consolidated fiscal balance, which measures the difference between total government revenue and spending, posted a deficit of 43.9 trillion won in the first half. The deficit narrowed by 24.7 trillion won from the same period last year.
The managed fiscal balance, which excludes social security funds from the consolidated balance to provide a clearer picture of the government's underlying fiscal position, recorded a deficit of 84.4 trillion won. That was an improvement of 9.9 trillion won from a year earlier.
The Ministry of Planning and Budget headquarters in the central city of SejongYONHAP
"As of June, the consolidated fiscal deficit was the smallest since the 38.5 trillion won deficit recorded in 2019, while the managed fiscal deficit was the smallest since the 83 trillion won recorded in 2023," a ministry official said.
Central government debt stood at 1,338.5 trillion won at the end of June, down 6.8 trillion won from a month earlier. It was still 70.3 trillion won higher than at the end of last year.
The government issued 17 trillion won in Treasury bonds in July, bringing total issuance for the first seven months of the year to 141.1 trillion won, or 63.1 percent of the annual issuance limit.
Foreign investors' holdings of Korean Treasury bonds decreased by 500 billion won in July from the previous month.
BY JEONG JAE-HONG [shin.woojin@joongang.co.kr]
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.
