The Ministry of Planning and Budget said Thursday that total revenue rose 19.1 percent from a year earlier to 381.9 trillion won in the January-June period, while expenditure increased 9.4 percent to 425.8 trillion won.
The improvement, however, did not reverse Korea’s broader debt buildup. Central government debt remained 70.3 trillion won higher than at the end of 2025 despite declining in June.
Revenue and expenditure reached 54.5 percent and 56.5 percent, respectively, of the government’s revised annual plans.
Revenue increased 61.3 trillion won from a year earlier, outpacing the 36.6 trillion-won rise in spending by 24.7 trillion won. That narrowed the consolidated fiscal deficit by the same amount to 43.9 trillion won from 68.6 trillion won a year earlier.
The managed fiscal balance — which strips out surpluses generated by social security funds such as the National Pension — improved by 9.9 trillion won to a deficit of 84.4 trillion won.
The smaller improvement in the managed balance reflected a sharp increase in social security fund surpluses. Those funds posted a combined surplus of 40.5 trillion won, up 14.8 trillion won from a year earlier, widening the difference between the consolidated and managed measures.
The first-half consolidated deficit was the smallest since 2019, while the managed deficit was the smallest since 2023.
The tax rebound provided the biggest boost to government coffers.
National tax revenue climbed 17.4 percent from a year earlier to 223.0 trillion won, adding 33.0 trillion won to revenue in the first half. Tax collections reached 53.7 percent of the government’s revised full-year target.
Income tax receipts rose by 10.4 trillion won as higher performance bonuses and payroll income boosted wage taxes, while increased property transactions lifted capital-gains tax revenue.
A booming stock market provided another major windfall.
Securities transaction tax revenue jumped by 5.2 trillion won to 6.8 trillion won, helped by heavier stock-market turnover and the restoration of transaction tax rates.
Value-added tax revenue increased by 4.9 trillion won on higher imports and lower refunds, while corporate tax receipts rose by 4.3 trillion won as company earnings improved.
Non-tax revenue increased by 9.0 trillion won to 28.4 trillion won, while income collected through government funds rose by 19.3 trillion won to 130.6 trillion won.
Spending also accelerated, though more slowly than revenue.
Transfer payments accounted for 33.5 trillion won of the 36.6 trillion-won increase in total expenditure.
The ministry attributed part of the rise to an additional 5.1 trillion won in local education grants and earlier payments of government support for the National Health Insurance program. Higher tax revenue automatically raises some education transfers under Korea’s statutory funding formula.
The government also spent 4.7 trillion won on relief measures related to elevated oil prices.
Spending on programs covered by the government’s accelerated-execution drive increased by 10.1 trillion won to 177.6 trillion won, although the execution rate slipped to 66.5 percent from 69.5 percent a year earlier.
Despite the improving fiscal balance, debt remained well above year-end levels.
Central government debt stood at 1,338.5 trillion won at the end of June, down 6.8 trillion won from May but up 70.3 trillion won from 1,268.1 trillion won at the end of last year. The ministry said debt typically declines around quarter-end when government bond redemptions exceed new issuance.
The outstanding balance of Korean government bonds fell by 4.3 trillion won during June to 1,229.7 trillion won, while housing bonds and foreign-exchange stabilization bonds also declined.
Government bond issuance totaled 17.0 trillion won in July, bringing cumulative issuance for the first seven months to 141.1 trillion won, or 63.1 percent of the annual ceiling excluding retail government bonds.
The average funding cost rose to 4.07 percent in July from 4.02 percent in June, while foreign holdings of Korean government bonds declined by 500 billion won.
AJP Takeaways
- South Korea’s managed fiscal deficit narrowed to 84.4 trillion won in the first half, its smallest midyear shortfall in three years, as revenue growth outpaced spending.
- National tax revenue jumped by 33.0 trillion won, helped by stronger income, corporate earnings and booming stock-market turnover.
- Central government debt eased in June but remained 70.3 trillion won above its end-2025 level, showing that stronger tax receipts have yet to reverse the broader debt buildup.
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