Liberty Korea Party lawmaker Yoon Sang-jik said on Nov. 6 that the total interest burden pertaining to treasury bonds is estimated at 105 trillion won in 2019 to 2023. For reference, the total was 88.8 trillion won from 2014 to last year.
Earlier, the South Korean government applied a financing rate of 2.6 percent in estimating the total interest burden. Although the immediate burden is rather low thanks to low interest rates, the problem is that the government debt itself is increasing very fast. According to the government, the treasury bond balance is predicted to increase from 610.3 trillion won to 686.2 trillion won from the end of August this year to next year. This is because the government is moving ahead with an expansionary fiscal policy with tax revenue conditions uncertain due to the ongoing economic slump.
The balance is estimated to reach 765.2 trillion won in 2021, 845.8 trillion won in 2022 and 993.8 trillion won in 2023. The total national debt including the treasury bonds is estimated to reach 1,061.3 trillion won in 2023, and then South Korea’s national debt-to-GDP ratio will rise from less than 40 percent to 46.4 percent from this year to 2023.
Still, it is also pointed out that the interest burden estimation is somewhat excessive. According to the National Assembly Budget Office, the burden is expected to stand at 16.5 trillion won as the financing rate is lower than the previous estimation of 3.5 percent although this year’s interest repayment burden calculated by the government is 18.2 trillion won. The office also said that the burden would be around 18 trillion won next year, lower than the government’s estimation of 19.8 trillion won.