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Dealers work in the dealing room of Hana Bank’s headquarters in Seoul on April 2 as a live broadcast of President Lee Jae-myung’s National Assembly address plays on a screen. Photo by Asia Today
April 2 (Asia Today) — South Korea’s state-guaranteed debt is projected to more than double this year and exceed 80 trillion won ($60 billion) by 2029, raising concerns about growing fiscal risks, according to a parliamentary report.
State-guaranteed debt, which the government must repay if the primary borrower defaults, is expected to reach 39 trillion won ($29 billion) this year, or 1.4% of gross domestic product, the National Assembly Budget Office said in a report on the 2026 supplementary budget.
That marks a 133.5% increase from 16.7 trillion won ($12.5 billion), or 0.6% of GDP, a year earlier. The figure is projected to continue rising to 80.5 trillion won ($60 billion), or 2.6% of GDP, by 2029.
Analysts warned that if the trend continues, the total could exceed 100 trillion won ($75 billion) by 2030, potentially weighing on the country’s creditworthiness.
The increase is largely driven by expanded issuance of bonds tied to government-backed funds, including those supporting supply chain stabilization and advanced strategic industries.
While bonds issued by the Korea Student Aid Foundation are expected to grow moderately, from 11 trillion won ($8.2 billion) in 2025 to 15.6 trillion won ($11.7 billion) in 2029, supply chain fund bonds are projected to rise more than fourfold over the same period, from 4.2 trillion won ($3.1 billion) to 21.4 trillion won ($16 billion).
Bonds linked to advanced strategic industries are expected to see the sharpest increase, jumping from 1.5 trillion won ($1.1 billion) to 43.5 trillion won ($32.6 billion).
Additional fiscal pressure could come from a new law set to take effect in June, which would allow the government to guarantee bonds issued to finance joint South Korea-U.S. strategic investments.
If those bonds are included in state-guaranteed debt, the overall total could rise further, as they are intended to support large-scale overseas investments, including $200 billion in U.S.-related projects and $150 billion in shipbuilding cooperation.
Park Jin, a professor at the Korea Development Institute, said increased bond issuance is partly unavoidable given ongoing supply chain risks and the need for investment in advanced industries such as artificial intelligence.
However, he added that authorities should closely monitor whether related fiscal spending is being used effectively as the government’s financial burden grows.
— Reported by Asia Today; translated by UPI
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