South Korea’s Deficit National Debt to Approach 900 Trillion Won in 2025

The South Korean government has revealed that the country’s deficit national debt is expected to reach 883.4 trillion won in 2025, accounting for 69.2% of the national debt forecast for next year.

According to the ‘2024-2028 National Debt Management Plan’ submitted by the Ministry of Strategy and Finance to the National Assembly, the deficit debt is expected to increase to 955 trillion won in 2026, exceeding 900 trillion won for the first time. The deficit debt will then steadily increase to 1,024.2 trillion won in 2027 and 1,092.7 trillion won in 2028.

National debt is divided into two categories: deficit debt and financial debt. Financial debt can be repaid without securing additional funds because there are assets corresponding to the debt, such as the National Housing Fund. On the other hand, deficit debt has no corresponding assets or is insufficient, so it must be repaid with taxes paid by the people. The higher the proportion of deficit debt, the greater the burden on the people.

As deficit debt increases, interest expenditures are also expected to rise. The government’s interest expenditures are estimated to increase by 10.8% from 26.9603 trillion won this year to 29.8821 trillion won next year. Of this, the interest on public funds management fund bonds, including deficit bonds issued by the government to repay deficit debt, is 25.4644 trillion won, accounting for 85.2% of total interest expenditures.

The interest cost alone for the deficit national debt is expected to reach 30 trillion won, putting a significant burden on the country’s finances.

The increasing deficit debt and interest expenditures have raised concerns about the country’s fiscal sustainability and the impact on future generations.