The interest expense arising from the issuance of Government Bonds has increased by about 10 trillion won over the past four years.
According to the National Assembly Budget Office and the open finance portal 'Open Finance' on the 17th, the Government Bonds interest expense based on the settlement of account is expected to have increased from 18.6426 trillion won in 2020 to 28.2206 trillion won last year, averaging a growth of 13% per year.
As expenditures began to rise due to COVID-19 in 2020, the pace of increase in Government Bonds interest expense accelerated. In 2021, the Government Bonds interest expense was 19.1713 trillion won, which surpassed 20 trillion won the following year and reached 21.0407 trillion won.
Most of the Government Bonds consist of national treasury bonds. In this interest expense, national treasury bonds accounted for 94.7% (26.7526 trillion won). In addition, housing bonds interest totaled 1.2022 trillion won, and the interest for foreign exchange stabilization bonds was 265.8 billion won.
This year, the government is expected to spend more than 30 trillion won on Government Bonds interest. It has already set a budget of 30 trillion won for the repayment of national treasury bond borrowings and allocated 660 billion won nominally for the repayment of foreign exchange stabilization bonds.
As a result, the proportion of Government Bonds interest expense in the government's total expenditure is increasing. This proportion was 3.4% in 2020 but surpassed 4% in 2023. Last year's figure was 4.4%.
The fact that the maturities of issued Government Bonds will soon be due poses a burden on the government. As of the end of last year, the annual volume of maturing national treasury bonds is 94 trillion won this year and 98 trillion won next year. This will drop to 74 trillion won by 2027. Although this figure may vary depending on the scale of early repayment, around 100 trillion won worth of refinancing issuance could enter the market this year and next.
Meanwhile, the scale at which the government borrows temporarily from the Bank of Korea or issues fiscal securities to raise funds is increasing. The amount borrowed temporarily from the Bank of Korea by the government has reached 113.9 trillion won this year, setting a record high.
The Ministry of Economy and Finance noted, "The temporarily incurred borrowing amount will be repaid with subsequent revenue, and as of the end of July, the balance is only 200 billion won," and stated, "Temporary borrowing is a means for the implementation of confirmed budgets and is unrelated to fiscal expansion."