Net Issuance of Government Bonds Next Year to Be 61 Trillion Won... 41% Reduction Compared to This Year

[Asia Economy Sejong=Reporter Dongwoo Lee] The government announced on the 22nd that it plans to reduce the net issuance of government bonds next year by 41% compared to this year, to around 61.5 trillion won.

The Ministry of Economy and Finance made this announcement at the 4th Government Bond Issuance Strategy Council held at the Seoul Banking Hall, chaired by Second Vice Minister Sangdae Choi. The Government Bond Issuance Strategy Council is a consultative body for communication between the issuing authorities and market participants.

Vice Minister Choi assessed, "With monetary tightening gradually coming to an end next year, the government bond market is expected to improve compared to this year, but it is still too early to be assured due to ongoing uncertainties such as the economy and inflation."

The net issuance of government bonds next year is planned to be around 61.5 trillion won, which is a 41.3% (43.3 trillion won) decrease compared to the net issuance scale of 104.8 trillion won in this year's budget, which was prepared last year.

The total issuance of government bonds next year will be 167.8 trillion won, about 10 trillion won less than this year's budget of 177.3 trillion won. When establishing the issuance plan for next year, the government decided to expand the buyback funds compared to this year's budget considering the unstable market conditions and reduce the issuance volume of government bonds in the first quarter. The issuance volume of government bonds in the first quarter next year will be reduced to 42 to 48 trillion won, down from 53.3 trillion won in the first quarter this year.

The government also plans to thoroughly manage liquidity by expanding the integrated issuance period of 2-year government bonds from 3 months to 6 months. Additionally, a regular buyback of 1.7 trillion won is scheduled for the 27th.

At the council meeting, the government also explained a mid- to long-term roadmap for the development of the government bond market.

The government will systematize the government bond issuance and crisis management system by establishing a government bond issuance model and management system, and will set up a support organization at the Korea Development Institute (KDI). Efforts to expand the demand base will continue, including institutional improvements to increase foreign investment in government bonds and the introduction of government bonds for individual investors.

The government will also expand market infrastructure by listing 30-year government bond futures and introducing an automated system for the Government Bond Specialized Trading Market (KTS). The government plans to steadily implement the policies outlined in the roadmap to elevate the status of Korean government bonds, including inclusion in the World Government Bond Index (WGBI).

Meanwhile, the council meeting was attended by nine investment institutions including banks, securities firms, insurance companies, and the National Pension Service, as well as three specialized research institutions: the Korea Development Institute (KDI), the Korea Institute of Finance, and the Capital Market Institute.

[Image source=Yonhap News]

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