Korea's national debt surpasses $861.2 bil. in 2025

Hwang Soon-kywan, a senior finance ministry official, speaks to reporters at the government complex in the central city of Sejong, Monday. Courtesy of finance ministry

Korea's national debt exceeded 1,300 trillion won ($861.2 billion) last year, with the debt-to-gross domestic product (GDP) ratio nearing 50 percent, the finance ministry said Monday.

Sovereign debt, which covers bond sales and financial borrowing by central and provincial governments, amounted to 1,304.5 trillion won as of end-2025, up 129.4 trillion won from a year earlier, according to the report on the national settlement presented by the Ministry of Finance and Economy.

Of the total, central government debt rose 127 trillion won to 1,268.1 trillion won, while local government debt stood at 36.4 trillion won.

The ministry said the debt-to-GDP ratio stood at 49 percent, up from 46 percent a year earlier but below the record high of 50.4 percent set in 2023.

"There may be concerns about the absolute size of the national debt, but the economy faced simultaneous internal and external shocks last year, including weakened domestic demand due to the impact of the emergency martial law and rapidly changing global trade conditions," Hwang Soon-kywan, a senior ministry official, told reporters.

Hwang added that the government focused on active fiscal policy rather than pursuing a passive approach focused on cutting total spending.

The managed fiscal balance, a key gauge of fiscal health calculated on stricter terms, posted a deficit of 104.2 trillion won.

The shortfall narrowed slightly from 104.8 trillion won in 2024 and came in at 7.5 trillion won lower than the 111.6 trillion won projected when the 2025 budget was drafted, according to the ministry.

Total national assets reached 3,584 trillion won in 2025, up 365.6 trillion won, or 11.4 percent, from a year earlier, it said.

The ministry attributed the increase in part to strong returns from the state pension fund.

The National Pension Service posted a record-high return of 18.8 percent in 2025, boosting financial assets by 244.4 trillion won.

"Unlike previous years, fiscal operations in the 2025 fiscal year returned to normal, moving away from large-scale tax revenue shortfalls and worsening fiscal balances," Finance Minister Koo Yun-cheol said.

The settlement report, approved by the Cabinet on Monday, will be submitted to the National Assembly following a review by the state audit agency.