Last year, the government's net Government Bonds totaled 1,129.9 trillion won, up 140 trillion won from a year earlier. The increase widened compared with 2024 (137.5 trillion won). Net Government Bonds reflect premiums and discounts based on market interest rates on the total Government Bonds issuance. It can be seen as a concept that estimates the expense the government must effectively bear from issuing Government Bonds.
According to the National Assembly Budget Office's "Analysis of the settlement of account national financial statements for fiscal 2025" on the 20th, the government's net Government Bonds increased from 737.6 trillion won in 2021 to ▲ 792.1 trillion won in 2022 ▲ 852.4 trillion won in 2023 ▲ 989.9 trillion won in 2024 ▲ 1,129.9 trillion won. The year-over-year increase widened from 60.3 trillion won in 2023 to 137.5 trillion won in 2024, and rose to 140 trillion won last year.
Net Government Bonds reflect premiums and discounts based on market interest rates on the Government Bonds issuance size. Premiums and discounts arise from differences between the Government Bonds coupon rate and the market rate. For example, if the government agreed to pay 3% interest on Government Bonds but the market interest rate rose to 4%, demand for the bonds would fall and they would be issued below face value. They would be sold at a discount. This results in an increase in the government's expense burden.
The sharp increase in net Government Bonds last year was due to expanded issuance as the government pursued expansionary fiscal policy. Last year, the government drew up two rounds of supplementary budget totaling 45 trillion won to boost the household economy. The plan included providing "consumption coupons" of 150,000 to 500,000 won per person to the public. Most of the supplementary budget funding was raised through Government Bonds issuance.
With increased Government Bonds issuance, last year's interest expense came to 28.2 trillion won, up 10.8% (2.7 trillion won) from a year earlier. The budget office said, "Government Bonds interest expense is a fixed fiscal outlay that follows bond issuance," adding, "The amount that must be spent first on interest expense before fiscal funds can be used for policy programs and other purposes may also expand, and in the long term it can act as a factor constraining the government's fiscal management capacity."