[2020 National Settlement] National Debt Approaches 2000 Trillion Won... Increased by 240 Trillion Won in One Year

[Sejong=Asia Economy Reporter Son Seonhee] Last year, the national debt approached 2,000 trillion won. Due to significantly increased spending in response to the COVID-19 crisis, the national debt grew at the largest rate ever recorded in one year. Since the fiscal authorities have announced that they will continue the 'expansionary fiscal policy' next year as well as this year, this trend is expected to continue for the time being. There are calls for urgent management of the total fiscal volume.

According to the '2020 Fiscal Year National Settlement Report' deliberated and approved by the government at the Cabinet meeting on the 6th, last year's national debt totaled 1,985.3 trillion won, an increase of 241.6 trillion won (13.9%) compared to the previous year.

The national debt is calculated by combining 'confirmed debt,' which has a fixed payment schedule and amount such as government bonds and borrowings, and 'unconfirmed debt,' which must be covered in the future. In the case of confirmed debt, long-term borrowing debt such as treasury bonds, public bonds, and borrowings increased by 111.6 trillion won in one year. In particular, to overcome the COVID-19 crisis last year, the government prepared four supplementary budgets totaling 67 trillion won, and the issuance amount of treasury bonds to raise funds fully reached the issuance limit approved by the National Assembly (174.5 trillion won). Due to an increase in housing sales transactions last year, the outstanding balance of national housing bonds increased by 2.5 trillion won, and the outstanding balance of foreign exchange stabilization bonds also increased by 1.3 trillion won.

Unconfirmed debt also increased significantly, including pension liabilities, which convert the future pension payments to beneficiaries of civil servant and military pensions into present value, increasing by 100.5 trillion won (71.4 trillion won for civil servant pensions + 29.1 trillion won for military pensions). Pension liabilities, which had slowed due to adjustments in last year's wage and inflation rate forecasts, have recently risen back to the 100 trillion won level this year due to discount rate adjustments caused by low interest rates.

National debt for which the government is directly responsible for principal and interest repayment (central + local governments, D1) recorded 846.9 trillion won, an increase of 123.7 trillion won compared to the previous year. This amount accounts for 44.0% of the Gross Domestic Product (GDP). It means that each citizen owes 16.35 million won in debt.

As fiscal conditions worsened, the integrated fiscal balance, which recorded a deficit for the first time last year, recorded a deficit of 71.2 trillion won this year, with the deficit widening further. The managed fiscal balance excluding funds also recorded a deficit of 112 trillion won, doubling the deficit compared to last year.

The National Settlement Report is planned to be submitted to the National Assembly by the end of May after the Board of Audit and Inspection conducts a settlement audit in accordance with the National Finance Act.

This content was produced with the assistance of AI translation services.