Seoul: South Korea's fiscal balance showed improvement in the first two months of the year compared to the previous year, despite an increase in total government spending. This positive shift was primarily driven by an uptick in tax revenue, as reported by the budget ministry on Thursday.

According to Yonhap News Agency, the managed fiscal balance, a critical measure of fiscal health calculated under stricter terms, registered a deficit of 14 trillion won (approximately US$9.4 billion) during the January-February period. This figure represents the 10th-largest deficit on record for this timeframe but marks a significant reduction from the 17.9 trillion-won deficit recorded in the same period last year.

During this period, tax revenue reached 71 trillion won, reflecting an increase of 10 trillion won from the previous year. Specifically, income taxes rose by 2.4 trillion won, attributed to higher wages and increased capital gains from real estate transactions. Meanwhile, value-added tax collections grew by 4.1 trillion won, driven by reduced refunds and higher import revenue.

Moreover, non-tax revenue and fund revenue experienced respective increases of 5.3 trillion won and 3.3 trillion won compared to the previous year. Despite these revenue increases, total government expenditures reached 128.7 trillion won in the January-February period, up by 12 trillion won from the previous year.

The fiscal balance, which is the total revenue minus total spending, resulted in a 7.1 trillion-won deficit through February.