From the Second Half of the Year, General Public Will Be Able to Invest in Government Bonds

Amendment to the National Debt Act Passed by the National Assembly

The National Debt Act amendment plan, which includes the issuance of government bonds for individual investors, has passed the National Assembly. As early as the second half of this year, the general public is expected to be able to invest in government bonds.

On the 30th, the partial amendment to the National Debt Act for the introduction of government bonds for individual investors passed the plenary session of the National Assembly. Currently, most of the government bond issuance volume is absorbed by domestic financial institutions, and the proportion of government bonds held by individuals was below 0.1% as of the end of 2021, which is significantly lower compared to major countries. However, with this amendment to the National Debt Act establishing the foundation for the introduction of ‘government bonds for individual investors,’ the general public will be able to invest in government bonds more easily.

The amendment to the National Debt Act newly establishes the basis for issuing ‘government bonds for individual investors,’ which, unlike general government bonds, restricts purchase eligibility to individuals. Also, unlike general government bonds issued through an auction method in the open market, ‘government bonds for individual investors’ can be issued by the Minister of Economy and Finance at a pre-announced interest rate. Furthermore, to prevent market disruption, the trading and ownership transfer through collateral setting of ‘government bonds for individual investors’ will be restricted.

In addition, the partial amendment to the Restriction of Special Taxation Act, which includes tax benefits for government bonds for individual investors, also passed the plenary session of the National Assembly on the same day. If ‘government bonds for individual investors’ are held until maturity, interest income generated from holding up to a total of 200 million KRW per person will not be included in comprehensive income and will be subject to separate taxation at 14%. Based on the amendment to the National Debt Act, the government plans to actively begin detailed product design after gathering opinions, aiming to issue ‘government bonds for individual investors’ in the second half of this year.

Joo Ho-young, floor leader of the People Power Party, is delivering a negotiation group representative speech at the National Assembly plenary session hall in Yeouido, Seoul, on the 14th. Photo by Kim Hyun-min kimhyun81@