Fiscal deficit of the South Korean government rose to the highest level in eight years due to shrinking tax revenues and swelling spending.

According to data released by the Ministry of Economy and Finance on Tuesday, the operating fiscal deficit reached 38.8 trillion won ($32.9 billion) in January to April, surging 185.3 percent or 25.2 trillion won from the same period last year when the figure stood at 13.6 trillion won. The operating fiscal balance, a barometer of budget soundness, is the difference between government revenues and expenditures, excluding social and public fund income like the national pension fund.

The loss reached a record high since the government had collected fiscal statistics in 2011. The deficit rose from 5.7 trillion won in 2011 and 9.3 trillion won in 2012 to 22.1 trillion won in 2015, and briefly declined to 9.2 trillion won in 2016 and 5 trillion won in 2017. It was on the increase again since last year when it picked up to 13.6 trillion won.

The huge loss was largely owed to a drop in tax revenues which were down 500 billion won from the previous year to 109.4 trillion won over the first four months of this year. The tax collection rate, the ratio of actual tax revenue to target revenue, reached 37.1 percent over the period, down 3.9 percentage points from the previous year. Corporate tax collection rate fell at the steepest pace, down 5.8 percentage points on year to 32.6 percent.

The government’s total expenditures reached 196.7 trillion won in the first four months, 25.9 trillion won higher than total revenues, according to the data. The spending grew by 27 trillion won from a year ago.

By Kim Tae-joon and Choi Mira

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]