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Government has borrowed record $104.8 billion from Bank of Korea this year

Published: 08 Sep. 2025, 17:41 Updated: 08 Sep. 2025, 17:46

The Bank of Korea main branch in Jung District, central Seoul, on Aug. 12 [YONHAP]

The Korean government borrowed nearly 145.5 trillion won ($104.8 billion) from the Bank of Korea (BOK) in temporary loans in the first eight months of the year, surpassing last year's record high.

According to data submitted by the BOK to conservative People Power Party Rep. Park Sung-hoon, who sits on the National Assembly’s Strategy and Finance Committee, the government borrowed 31.6 trillion won in temporary loans from the central bank in alone.

Between January and August, the government borrowed 145.5 trillion won, up 13.8 percent from the previous record of 127.9 trillion won recorded in the same period of last year.

The government began the year with 5.7 trillion won in January, followed by 1.5 trillion won in February, 40.5 trillion won in March, 23 trillion won in April, 17.9 trillion won in June and 25.3 trillion won in July. Borrowing and repayments were both halted in May, just ahead of the presidential election, but lending resumed afterward.

By the end of August, the government had repaid 8.9 trillion won of the temporary loans taken out that month, leaving a balance of 22.9 trillion won.

Officials from the Bank of Korea answer questions from reporters during a press conference on Sept. 4 after the central bank released the current accounts figures for July 2025. [BANK OF KOREA]

The BOK’s temporary governmental loan program is designed to address short-term cash shortages caused by discrepancies between revenue and expenditure during the fiscal year. The system is akin to an overdraft line of credit that individuals might open at a commercial bank.

Increased reliance on the so-called BOK overdraft suggests a growing mismatch between revenue and spending, requiring the government to rely more frequently on stopgap funding. The scale of borrowing tends to grow when there is a larger imbalance between fiscal spending and tax revenue.

The government announced its budget proposal for next year on Aug. 29, totaling 728 trillion won — up 8.1 percent from this year’s initial budget of 673.3 trillion won. Finance Minister and Deputy Prime Minister Koo Yun-cheol said during a briefing that “fiscal policy must act as a pump primer to turn the spark of recovery into a flame of growth,” signaling expansionary fiscal measures ahead.

“The Lee Jae Myung administration continues to rely on the BOK overdraft and has set a record for temporary borrowing,” said Park. “Rather than calling for expansionary spending, the government must first come up with fundamental measures to bolster revenues and restructure expenditures.”

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
BY KIM JI-HYE [[email protected]]