Central government debt tops 1,200 trillion won for first time

Rapid rise stirs concerns over fiscal space ahead of year-end

A signboard outside the Ministry of Economy and Finance in Sejong./News1

South Korea’s central government debt surpassed 1,200 trillion won ($886.6 billion) for the first time in May, climbing nearly 20 trillion won in a single month and adding pressure on the government’s fiscal policy amid slowing revenue and continued stimulus outlays.

The Ministry of Economy and Finance said on July 10 that debt totaled 1,217.8 trillion won as of May, up 19.9 trillion won from April and 61.7 trillion won since January. That figure is just 28.3 trillion won short of the government’s full-year projection of 1,246.1 trillion won, set after its first supplementary budget.

Central government debt surpassed 1,000 trillion won in 2022 and 1,100 trillion won in August 2023. With a second extra budget approved in July, the ministry now expects debt to reach 1,267.2 trillion won by year-end. Including local government liabilities, total national debt is projected to hit 1,301.9 trillion won.

Revenue from January to May rose to 279.8 trillion won, up 21.6 trillion won from a year earlier, but collection slowed slightly. The revenue progress rate—how much of the year’s target has been met—declined to 42.9%, down from 43.4% a year ago.

Government spending during the same period reached 315.3 trillion won, an increase of 4.9 trillion won year-on-year. Of the 241.1 trillion won allocated to fast-tracked projects, 139 trillion won, or 57.7%, had been spent by May—2.1 percentage points higher than last year’s execution rate.

To cover the shortfall, the government issued more deficit-financing bonds. The managed fiscal balance, which excludes social security funds, recorded a 54.2 trillion won deficit as of end-May.

[Kang Woo-ryang]

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