'2021~2025 National Fiscal Management Plan and National Debt Management Plan'
Interest Expenditure Expected to Reach 19.6884 Trillion Won Next Year
Deputy Prime Minister and Minister of Economy and Finance Hong Nam-ki is delivering opening remarks at the 45th Emergency Economic Central Countermeasures Headquarters meeting held at the Government Seoul Office in Jongno-gu, Seoul, on the 16th. Photo by Kim Hyun-min kimhyun81@
[Asia Economy Reporter Jang Sehee] Deficit-bearing national debt is expected to surpass 900 trillion won by 2025. Since deficit-bearing national debt must be repaid with taxpayers' money, concerns are rising that the tax burden will increase accordingly.
According to the 2021-2025 National Fiscal Operation Plan and National Debt Management Plan submitted by the government to the National Assembly on the 5th, deficit-bearing national debt is projected to reach 953.3 trillion won in 2025, accounting for 67.7%.
National debt is divided into deficit-bearing debt, which must be repaid using taxes collected from the public, and financial debt, which can be repaid on its own because it has corresponding assets such as loans (National Housing Fund) or foreign currency assets (Foreign Exchange Stabilization Fund).
Financial debt can be repaid by recovering bonds, so there is no need to prepare separate funds for repayment. On the other hand, deficit-bearing debt must be repaid entirely with taxpayers' money.
Deficit-bearing debt is expected to increase from 609.9 trillion won this year to 686 trillion won next year, 766.2 trillion won in 2023, 854.7 trillion won in 2024, and surpass 900 trillion won to reach 953.3 trillion won in 2025. The proportion of deficit-bearing debt in national debt will also rise from 63.1% this year to 64.2% next year, 65.2% in 2023, 66.2% in 2024, and 67.7% in 2025.
As deficit-bearing debt increases, interest costs will also rise.
Interest on the Public Fund Management Fund (PFMF), which arises from government bond issuance including deficit-bearing debt, is 14.7704 trillion won this year.
PFMF interest is expected to increase to 16.4263 trillion won next year, 16.9596 trillion won in 2023, 17.1108 trillion won in 2024, and reach 17.7566 trillion won in 2025.
Interest on the Housing and Urban Fund is projected at 1.1408 trillion won this year, 1.2292 trillion won next year, 1.3721 trillion won in 2023, 1.0877 trillion won in 2024, and 950.8 billion won in 2025.
Interest on the Post Office Savings Special Account is estimated at 1.0793 trillion won this year and is expected to be 980.1 billion won annually from next year through 2025.
Total interest expenditures, including PFMF interest, Housing and Urban Fund interest, Post Office Savings Special Account interest, and other interest, are presented as 18.3346 trillion won this year.
Interest expenditures are expected to increase annually to 19.6884 trillion won next year, 20.4611 trillion won in 2023, 20.4096 trillion won in 2024, and 20.9912 trillion won in 2025.
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