Deficit-type debt figures omitted from documents submitted to National Assembly; interest costs to reach 1.5% of GDP
Government says national debt-to-GDP ratio to stay below 50% by 2030, a 'significant improvement'
South Korea's deficit-type debt — obligations that must ultimately be repaid through the public tax burden — is projected to exceed 1,300 trillion won ($956 billion) by 2030, more than 280 trillion won above this year's level.
Interest costs on the national debt are also expected to rise in tandem, surpassing 50 trillion won a year by the end of the period.
According to the Ministry of Planning and Budget on Sunday, deficit-type debt stands at 1,117.1 trillion won in next year's budget proposal, up 91.9 trillion won from the 1,025.2 trillion won recorded under this year's supplementary budget.
The figure is projected to climb steadily — to 1,192.4 trillion won in 2028 and 1,245.8 trillion won in 2029 — before reaching 1,312.3 trillion won in 2030.
That represents an increase of 287.1 trillion won over four years compared with this year's supplementary budget level.
Over the same period, financial-type debt is set to grow by 34.3 trillion won, rising from 387.6 trillion won to 421.9 trillion won.
Deficit-type debt's share of total national debt is forecast to expand from 72.6 percent under this year's supplementary budget to 73.5 percent next year, 74.5 percent in 2028, 75.1 percent in 2029, and 75.7 percent by 2030.
The share of financial-type debt, by contrast, is expected to fall from 27.4 percent this year to 24.3 percent in 2030.
However, the projected deficit-type debt figures represent an improvement over the previous medium-term plan covering 2025–2029, which had forecast 1,248.1 trillion won (75.0 percent) for 2028 and 1,362.5 trillion won (76.2 percent) for 2029. The improvement is attributed largely to a surge in tax revenues driven by a semiconductor supercycle.
Deficit-type debt encompasses general account debt, net local government debt, Treasury debt obligations, and the debt of accounts and funds established to retire or repay existing liabilities.
Unlike financial-type debt, which is backed by financial assets, deficit-type debt carries no corresponding asset — meaning it must effectively be repaid through the public tax burden.
A faster rise in deficit-type debt relative to financial-type debt is therefore generally interpreted as a deterioration not only in the quantity of national debt but also in its quality.
The government has included deficit-type debt projections in its annual national fiscal management plan or the accompanying national debt management plan every year, but the documents submitted this year omitted those figures.
A ministry official said the omission occurred because there is no prescribed format for the national debt management plan, and when officials drafted a new format this year the deficit-type debt section was left out. The official said the change was part of a broader restructuring of the document's content to reflect evolving circumstances, and added that new material — including international comparisons — had been incorporated instead.
Even so, the unexplained absence of a key national debt statistic that has appeared in documents submitted to the National Assembly for years is likely to fuel debate over the continuity and transparency of fiscal information disclosure.
A review of past national fiscal management plans through the National Assembly's bill information system shows that deficit-type debt projections have been included without exception every year since 2006.
Interest costs on the national debt are also set to keep rising. Under the 2026–2030 national debt management plan, interest costs this year total 36.5 trillion won, up 4.8 trillion won from last year.
The figure is projected to rise to 42.8 trillion won next year, 45.4 trillion won in 2028, and 48.9 trillion won in 2029, before crossing the 50 trillion won threshold in 2030 at 53.3 trillion won.
As a share of GDP, national debt interest costs are expected to increase from 1.3 percent in 2026 to 1.5 percent in 2030.
The government said it aims to keep national debt interest costs at around 1.5 percent of GDP by 2030.
It added that, measured against the general government interest expenditure (D2) of advanced economies, South Korea's ratio stands at 1.3 percent this year and 1.5 percent next year, compared with an OECD average of 2.0 percent this year and 2.1 percent next year.
Stronger-than-expected growth has expanded the size of the economy, leading to improvements in fiscal indicators including the national debt-to-GDP ratio.
That ratio is projected to fall from 50.6 percent under this year's supplementary budget to 48.3 percent next year, before edging back up to 48.8 percent in 2029 and 49.0 percent in 2030.
The government said this represents a significant improvement of 9.0 percentage points compared with the 58.0 percent projected for 2029 under the previous medium-term plan covering 2025–2029.
oskymoon@heraldcorp.com
