South Korea's fiscal deficit has reached 54 trillion won in the first three months of this year, nearing the government's annual projection due largely to sluggish tax inflow.

According to the finance ministry on Thursday, state revenue totaled 145-point-four trillion won in the January-to-March period, down 25 trillion won from a year earlier.

Most of the decline in revenue came from reduced taxes, including a seven-point-one-trillion-won decrease in income tax revenue amid a chill in the housing market, as well as a six-point-eight-trillion-won drop in corporate taxes.

State expenditure in the first quarter amounted to 186-point-eight trillion won, down 16-point-seven trillion won from the previous year. This was largely due to an end to COVID-related programs and compensation payouts.

While the consolidated fiscal balance posted a shortfall of 41-point-four trillion won, expanding by eight-point-three trillion won on-year, the management fiscal balance, which subtracts the four major guarantee funds, stood at a deficit of 54 trillion won.

The management balance is close to the government's projection of 58-point-two trillion won in the red for the entire year.