Korea’s sovereign debt issues topped 100 trillion won ($85.4 billion) in the first half, a six-month record, as the government resorted to debt financing to back this year’s record budget amid decreased tax revenue from poor business performance.

According to the Korea Financial Investment Association on Wednesday, the Korean government’s debt issuance in the first half of this year jumped 55.8 percent on year to 104.8 trillion won ($89.6 billion), replacing last record of 87.2 trillion won in the first half of 2015.

Net debt issuance, or gross debt issuance minus repayments, totaled 50.5 trillion won, also the largest for a six-month period. Outstanding government debt surged to 691 trillion won as of the end of June.

The jump in sovereign debt issues is the result of fiscal expansion to invigorate the economy that retreated in the first quarter. Seoul frontloaded 61 percent of its budget earmarked for this year to make jobs in the public sector and finance social overhead capital projects.

Korea’s budget for 2019 rose by the biggest pace of 9.5 percent against the previous year for a historic high of 469.6 trillion won. A supplementary of budget 6.7 trillion won is pending at the legislative.

The government was able to refinance debt issues in the second half through tax revenue. But a stretch in fiscal deficit is inevitable this year as tax collection has been slow, with corporate profits plunging more than 40 percent in the first quarter.

Korea’s tax revenue in the first three months shrank 800 billion won from the same period last year.

By Sohn Il-seon and Lee Ha-yeon

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