Seoul: South Korea's national debt is projected to climb to over 150 percent of its gross domestic product (GDP) by 2065 should the current trends of declining population and slowing economic growth continue, the finance ministry said Wednesday.

According to Yonhap News Agency, the Ministry of Economy and Finance reported that the country's debt-to-GDP ratio is estimated to rise to 51.6 percent in 2026 from 49.1 percent this year and further climb to 58 percent in 2029. At the projected rate, it will reach 156.3 percent by 2065, as detailed in the ministry's third and latest long-term fiscal outlook, following its initial reports published in 2015 and 2020.

The national debt-to-GDP ratio serves as a key indicator of a country's fiscal health, with a lower ratio generally providing governments with more flexibility in expanding expenditures. The ministry emphasized that the projection aims to highlight fiscal risks if no structural reforms are implemented, rather than predicting the exact debt level in 40 years. Concerns arise as many believe national debt may negatively affect the country's sovereign credit rating once the debt-to-GDP ratio nears 60 percent.

The ministry suggested that modest fiscal discipline, such as reducing 5 percent of discretionary spending increases annually for the next 20 years, could lower the ratio by 6 percentage points by 2065. Minor adjustments can have significant cumulative effects over time, meaning that changes in variables, such as addressing low birth rates or tax revenues, could significantly alter the long-term outlook.

A ministry official stated, "Depending on future structural reforms and policy responses, it is possible to change the trajectory of national debt and ensure fiscal sustainability." The latest estimate aligns with projections by other major institutions, including the state-run think tank, the Korea Development Institute, which earlier projected the national debt-to-GDP ratio to reach 144.8 percent by 2060 under similar assumptions.