Seoul: The South Korean government is anticipated to incur interest payments exceeding 30 trillion won (US$21.6 billion) on Treasury bonds and other national debts by the end of this year, as part of its expansionary measures to stimulate the economy.
According to Yonhap News Agency, the government's interest expenses for Treasury bonds, foreign exchange stabilization fund bonds, and national housing bonds amounted to 28.2 trillion won last year, an increase from 24.6 trillion won in 2023. This information was derived from data provided by the National Assembly Budget Office and the public website Open Fiscal Data.
Over the past four years, the total interest payments have been growing at an average rate of 13 percent annually, rising from 18.6 trillion won in 2020 to 19.2 trillion won in 2021, and reaching 21 trillion won in 2022. If this growth trajectory continues, projections indicate that interest expenses will surpass 30 trillion won by 2025.
For the current year, the government has allocated approximately 30 trillion won for Treasury bond repayment and 660 billion won for foreign exchange stabilization fund bonds. Consequently, the ratio of national debt interest payments to total government expenditures escalated to 4.4 percent last year, up from 4 percent in 2023 and 3.1 percent in 2022.
A significant concern is the approaching maturity of substantial volumes of government bonds issued during the COVID-19 pandemic. By the end of 2024, bonds valued at 94 trillion won are due to mature this year, with an additional 98 trillion won maturing next year. The total is expected to gradually decrease to around 74 trillion won in 2027 and into the 50 trillion-won range by 2028.
Furthermore, the government's implementation of two additional supplementary budgets this year is anticipated to intensify the financial burden. Approximately 100 trillion won worth of refinancing issuance is expected to saturate the bond market this year and the next. This influx could exert downward pressure on bond prices, elevate interest rates, and further escalate the government's debt-servicing costs.