Fiscal deficit hit record high amid slow growth, expanded spending

Weighed down by the prolonged slow growth and the government’s consequent fiscal expansion, South Korea’s fiscal deficit reached a record-high level, data by the Ministry of Economy and Finance showed Friday.

According to the monthly fiscal trend report, the accumulated fiscal balance as of the end of September stood at 26.5 trillion won ($22.9 billion) in deficit.

The corresponding figure had plunged into the red in 2005, 2006, 2009 and from 2013 to 2015, but the latest deficit volume was the largest to be observed since the related statistics were first tallied in 1999.

Also, the operational budget balance -- excluding the four major social welfare funds from the consolidated balance -- came to 57 trillion won in deficit, marking the biggest loss for January-September.

The government attributed the deficit to the expanded provision of earned income tax credit (EITC) and child tax credit (CTC), as well as reinforced fiscal execution, according to the ministry.

So far this year, the administration has provided 4.7 million households with 5 trillion won worth of EITC and CTC, up sharply from 1.9 trillion won last year.

Accumulated tax revenues, on the other hand, slipped 5.6 trillion won to 228.1 trillion won as of end-September, marking the first on-year fall since 2013.

By Bae Hyun-jung (tellme@heraldcorp.com)