Korea's debt per capita to top 30 million won by 2028

Korea's national debt per capita is projected to surpass 30 million won ($22,300) for the first time in 2028, just three years after the figure first passed 25 million won.

Rising debt and a shrinking population are pushing the number up even as a semiconductor-driven tax windfall delivers the largest revenue haul on record. The government is spending that windfall on advanced industry, as well as on welfare and mandatory programs that are hard to shrink once they expand, and the principal and interest will be serviced by a generation that had no say in the borrowing.

The JoongAng Ilbo calculated the projections using the government's 2026-2030 National Fiscal Management Plan and population estimates from the Ministry of Data and Statistics. Under this year's supplementary budget, the national debt stands at 1.4 quadrillion won. Against a projected population of 51.6 million, debt per capita comes out to 27.4 million won, more than double the 12.2 million won recorded in 2016.

National debt is the debt the government is directly obliged to repay. It is a cash-basis measure covering central and local government debt, including local education authorities.

The per capita figure does not mean anyone personally owes that amount. It serves as a reference point for the potential fiscal burden, because higher debt may eventually require higher taxes, lower spending elsewhere, or both. The National Assembly Budget Office ran a national debt clock on its website until 2023 that displayed both the total and a per capita figure, calculated by dividing the national debt by the total population.

Applying that same calculation, debt per capita will rise to 31.1 million won in 2028 and 33.8 million won in 2030. The 2030 figure would be 2.8 times the 2016 level, a 176 percent increase.

The government expects national debt to rise by 107 trillion won next year to 1.5 quadrillion won. National tax revenue, meanwhile, is projected at 584.4 trillion won, up 49.8 percent from the 390.2 trillion won in this year's original budget, largely because of the semiconductor boom.

Rather than use the surge primarily to pay down debt, the government plans to channel it through a new "future response fund" for investment and fiscal reserves. The fund is set at 162.3 trillion won for 2027. Of the 162.3 trillion won, only 12.5 trillion won will go toward reducing new government bond issuance.

The government also plans to maintain an expansionary stance through 2030. Total spending is projected to reach 1 quadrillion won that year, while national debt rises to 1.7 quadrillion won. During the same timeline, the Data Ministry projects the population will fall from 51.7 million last year to 51.3 million in 2030 and 50.1 million in 2040.

The government argues that debt relative to the size of the economy matters more than the absolute total. On a supplementary budget basis, national debt is projected at 50.6 percent of GDP this year. It is expected to fall to 48.3 percent next year and hold at 49 percent in 2030.

"The debt-to-GDP ratio had been projected to reach 58 to 59 percent under [last year's] medium-term plan," said Minister of Planning and Budget Park Hong-keun. "We will bring it down by more than 10 percentage points and make this a clear starting point for slowing the rise in the debt ratio that concerns future generations."

The improvement in those ratios, however, depends heavily on a temporary, semiconductor-driven increase in tax revenue. If the chip cycle turns and receipts fall, spending that has already been expanded could become a larger burden.

"The improvement in indicators such as the managed fiscal deficit as a share of GDP is largely the result of higher nominal GDP, the denominator and additional semiconductor tax revenue," said Seok Byoung-hoon, a professor of economics at Ewha Womans University. "The semiconductor industry is cyclic, so this is not sustainable. Some of the additional tax revenue should have been used to pay down national debt to secure fiscal sustainability."

The growing debt stock will also raise interest costs, which eat into what is left for everything else. The government's 2026-2030 National Debt Management Plan projects annual interest costs to rise from 36.5 trillion won this year to 42.8 trillion won next year and 53.3 trillion won in 2030. Interest is expected to climb from 1.3 percent to 1.5 percent of GDP over the period. Next year's interest bill alone would exceed the 41.2 trillion won budget for industry, small and medium enterprises and energy.

The 2027 budget will also expand recurring cash benefits, which are difficult to pull back once in place. The current child allowance of 100,000 to 130,000 won a month becomes a child basic allowance paying 200,000 won, or 300,000 won in designated regions. A new fund will provide eligible children with up to 1.2 million won a year in government contributions from birth through age 18.

Meanwhile, the government has effectively shelved a proposed overhaul of basic pension eligibility, even as the number of recipients is expected to surge as the population ages.

"Expanding cash welfare should be accompanied by detailed cost estimates, and I question whether that work has been done," said Kim Woo-cheol, a professor in the Department of Science in Taxation at the University of Seoul. "Once cash welfare becomes universal, it is difficult to scale back. There is a risk that it will boomerang and put pressure on public finances later."

Economists say the stalled debate over writing a fiscal rule into law should be revived. Such a rule would keep fiscal soundness indicators from exceeding set levels.

"If the government sharply increases the budget when growth is strong, it becomes difficult to cut spending later even after growth slows," said Kim Sang-bong, a professor of economics at Hansung University. "A fiscal rule should be introduced, but it should also be designed to leave room for higher spending when the economy is weak."

BY NAM SOO-HYOUN [[email protected]]