According to the government's financial plan submitted to the National Assembly in early September, national debt interest is projected to exceed 53 trillion won by 2030.
Interest expenses of 36 trillion 5000 billion won this year are projected to increase by more than 16 trillion won in four years.
Why is interest growing faster than the debt itself?
Three-line summary
1. National debt interest: from 36 trillion won this year to 53 trillion won by 2030
2. Deficit-financing debt will increase to 1312 trillion 3000 billion won by 2030
3. Next year's budget can be revised through National Assembly deliberation
Interest Expenses Increase by Nearly 17 Trillion Won Over Five Years
According to the '2026–2030 National Fiscal Management Plan' submitted by the Ministry of Economy and Finance to the National Assembly, national debt interest expenses will increase from 36 trillion 5000 billion won this year to 42 trillion 8000 billion won next year, 45 trillion 4000 billion won in 2028, 48 trillion 9000 billion won in 2029, and reach 53 trillion 3000 billion won by 2030. As a share of gross domestic product (GDP), this rises from 1.3% this year to 1.5% by 2030. The government stated this is below the Organization for Economic Cooperation and Development (OECD) average of 2.0–2.1%. Interest is growing at this rate because national debt itself continues to expand. National debt is projected to increase from 1413 trillion 8000 billion won this year to 1519 trillion 8000 billion won in 2027 and reach 1734 trillion 1000 billion won by 2030.
Debt Ratios Are Declining, but Why Is Interest Rising?
The government emphasized that GDP is growing faster than national debt, which in turn is lowering the national debt-to-GDP ratio. This is supported by increased tax revenues from the semiconductor export boom and nominal GDP growth. However, a declining ratio is different from a reduction in the actual amount of interest that must be paid. The absolute size of debt continues to grow, and with recent international interest rate pressures—including U.S. 10-year Treasury yields rising to the 4.8% range—the funding costs for new bond issuances and refinancing maturing debt are also increasing. Professor Hwang Sung-hyun of Incheon University's economics department pointed out that "reducing national debt when tax revenues increase is the norm for sound fiscal management."
Deficit-Financing Debt Was Omitted From Data Submitted to the National Assembly
Deficit-financing debt refers to the portion of national debt that lacks dedicated financial assets to cover repayment and must ultimately be paid through taxation. This deficit-financing debt is projected to grow from 1025 trillion 2000 billion won this year to 1312 trillion 3000 billion won by 2030, with its share of total national debt increasing from 72.6% to 75.7%. However, deficit-financing debt projections, which have been included annually in the National Fiscal Management Plan since 2006, were omitted as a separate item from the data submitted to the National Assembly this year. The Ministry of Economy and Finance explained that it was omitted because "there was no established format, and it was left out when creating the new format," but controversy has been raised regarding the continuity of fiscal information disclosure. The figures presented here represent the government's medium-term plan projections, and even next year's budget must be finalized through National Assembly deliberation.
References
Tags #NationalDebt #GovernmentDebt #InterestExpense #DeficitFinancingDebt #NationalFiscalManagementPlan #GovernmentBondYield #BaseRate #BudgetProposal #FiscalHealth #NationalDebtRatio #NationalBond #TaxRevenue