Next Year's Government Bond Limit Set at 198 Trillion Won... Real Issuance Volume Expected to Increase

Next Year’s Government Bond Issuance Increases by 39.2 Trillion Won
Net Issuance at 80 Trillion Won...Up 30.1 Trillion Won
Additional Government Bonds to Be Issued If Supplementary Budget Is Formulated

The government will issue government bonds up to a limit of 197.6 trillion won next year. The net issuance limit is 80 trillion won. With the issuance limit of government bonds significantly increased compared to this year, there are forecasts that the actual issuance volume may increase further in the future.

The Ministry of Economy and Finance finalized the '2025 Government Bond Issuance Plan' on the 30th based on the next year's budget confirmed by the National Assembly and market condition forecasts.

The issuance limit for government bonds next year is a total of 197.6 trillion won, an increase of 39.2 trillion won (24.7%) compared to this year's issuance volume. Among this, the net issuance limit (80 trillion won) will increase by 30.1 trillion won, and the market stabilization government bond issuance limit(117.5 trillion won), which includes bond refinancing due to maturities, will increase by 9 trillion won.

The Ministry of Economy and Finance has been reducing the issuance limit of government bonds in recent years but decided to expand it next year. During the COVID-19 outbreak, there were many short-term bonds issued with maturities of 3 years, and many maturities will come due next year. Due to two consecutive years of tax revenue shortfalls, securing funds is also necessary.

The actual issuance volume of government bonds may increase further next year. In addition to issuing Korean won-denominated Foreign Exchange Stabilization Fund bonds with an annual limit of 20 trillion won, there are rumors of a supplementary budget being prepared. An official from the economic department said, "If a supplementary budget is made, more government bonds will have to be issued."

The Ministry of Economy and Finance plans to issue government bonds considering expenditure needs next year, based on the principle of even monthly issuance, with 55-60% in the first half of the year and 27-30% in the first quarter. However, in January and December, issuance volumes will be flexibly adjusted to avoid supply shocks by monitoring government funds and market supply-demand conditions.

Considering the demand capacity for long-term bonds from insurance companies, the flexibility of issuing long-term bonds (20, 30, 50 years) will be slightly expanded from 35±3% to 5%. The issuance proportions for short-term (2, 3 years) and medium-term (5, 10 years) bonds will be maintained at 30±3% and 35±3%, respectively.

The Ministry of Economy and Finance will promote improvements in the distribution market system, such as introducing an automatic subscription system, to respond to increased demand including inclusion in the World Government Bond Index (WGBI). To expand the base of the government bond market, it will activate investment in government bonds for individual investors and prepare issuance plans for new government bonds (green bonds, Korean won-denominated foreign exchange stabilization bonds, etc.).

An official from the Ministry of Economy and Finance said, "Although it is unknown when WGBI-tracking funds will flow in, the market expects funds to come in at least from the first half of next year," adding, "Based on this, the (next year's) government bond issuance volume can be absorbed."

The issuance scale of government bonds for individual investors next year is 1.3 trillion won. The Ministry of Economy and Finance plans to issue 100 billion won of government bonds for individual investors next month. They set limits of 80 billion won for 10-year bonds and 20 billion won for 20-year bonds. In the first half of next year, they also plan to promote the issuance of new 5-year bonds in addition to 10- and 20-year bonds.

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