[Exclusive] Moon Administration Issues 225 Trillion Won in Deficit Bonds Over 4 Years... 55% Increase Compared to Previous Government

2018 15 Trillion to 102 Trillion Last Year Leap
Already Surpassed 73 Trillion as of August This Year... Repayment Barely Noticeable
Interest Burden on New Issuance Expected to Increase Due to Rate Hikes

[Asia Economy Reporter Jang Sehee] The scale of deficit bonds issued under the Moon Jae-in administration has surged by 55% compared to the previous Park Geun-hye administration. Unlike financial liabilities backed by corresponding assets, deficit bonds are national debts that require regular interest payments. As the national debt has increased and the base interest rate is likely to rise, the burden on the public is also expected to grow.

According to the "2013?2021 Deficit Bond Issuance Status" submitted by the Ministry of Economy and Finance to Choo Kyung-ho, a member of the National Assembly's Planning and Finance Committee from the People Power Party, the amount of deficit bonds issued from 2018, when the Moon Jae-in administration began directly drafting and executing the budget, until August of this year, reached 225.1 trillion won, which is 55% (80.3 trillion won) more than the 144.8 trillion won issued during the Park Geun-hye administration from 2013 to 2017. Considering that the issuance limit for deficit bonds this year is 104 trillion won, the scale of future deficit bond issuance is expected to increase further.

By year, the issuance rose sharply from 15 trillion won in 2018 to 34.3 trillion won in 2019, and then to 102.8 trillion won last year. As of August this year, 73 trillion won worth of deficit bonds have been issued. Although the issuance of deficit bonds exceeded 100 trillion won last year, no repayments were made. However, this year, 1.9 trillion won has been repaid.

Focusing more on borrowing than repayment, the outstanding balance of deficit bonds has increased every year. The outstanding balance of deficit bonds rose from 300.4 trillion won in 2018 to 437.5 trillion won in 2020, an increase of 137.1 trillion won over two years. As of August this year, it has surpassed 508.6 trillion won.

Since deficit bonds continuously incur interest costs, they translate into a burden for future generations. Professor Lee Jong-hwa of Korea University’s Department of Economics stated, "The speed at which deficit bonds are increasing is also a problem," adding, "There needs to be a discussion on which taxes will be used to secure funding."

The proportion of deficit bonds within the total national debt also exceeded 60% last year. It was 51.7% in 2013 when the Park Geun-hye administration took office, rose to 56.8% in 2017, and reached 63.1% this year. The share of financial liabilities decreased from 48.3% in 2013 to 39.4% last year. Representative Choo criticized, "The debt burden accumulated by the Moon Jae-in administration’s fiscal spending policies will be fully passed on to future generations," and added, "The Ministry of Economy and Finance, which failed to properly act as the guardian of national finances, needs to reflect on this."