SEOUL– South Korea plans to buy a total of 2 trillion won (US$1.7 billion) in government bonds in late August in a bid to pay off part of its national debt, the finance ministry said Friday.
The government will buy back Treasury bonds on Aug. 25 and 31 as part of efforts to repay state debt as planned under the latest extra budget, according to the Ministry of Economy and Finance.
When creating this year’s second extra budget in June, the ministry said it will spend 2 trillion won in repaying part of the national debt with excess tax revenue.
The National Assembly approved an extra budget of 34.9 trillion won in July in a bid to fund another round of pandemic relief funds for small merchants and people in the bottom 88 percent income bracket.
The planned bond buyback will be the largest size among debt repayments carried out with extra budgets.
“The move is expected to help lower the debt-to-GDP ratio and stabilize the government bond markets,” the ministry said in a statement.
With the debt repayment, the debt-to-GDP ratio is expected to reach 47.2 percent this year, down 1 percentage point from its earlier estimate of 48.2 percent. The fall in the ratio will be also affected by an accelerating economic recovery.
South Korea’s national debt grew at the fastest pace last year as the government sharply increased fiscal spending to tackle the fallout of the COVID-19 pandemic.
In 2020, the country’s debt rose by the largest-ever amount of 123.7 trillion won to a record high 846.9 trillion won.
Source: Yonhap News Agency