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

According to Yonhap News Agency, sovereign debt, which includes bond sales and financial borrowing by central and provincial governments, amounted to 1,304.5 trillion won as of the end of 2025. This marks an increase of 129.4 trillion won from the previous year, as reported in the national settlement presented by the Ministry of Finance and Economy. Central government debt rose by 127 trillion won to reach 1,268.1 trillion won, while local government debt stood at 36.4 trillion won.

The finance ministry noted that the debt-to-GDP ratio was at 49 percent, up from 46 percent a year earlier but still below the record high of 50.4 percent set in 2023. During a briefing in Sejong, Hwang Soon-kywan, a senior official from the finance ministry, addressed concerns regarding the national debt's size, citing challenges such as weakened domestic demand due to emergency martial law and shifting global trade conditions.

Hwang emphasized that the government opted for an active fiscal policy rather than a passive approach focused on cutting spending. The managed fiscal balance recorded a deficit of 104.2 trillion won, slightly reduced from the 104.8 trillion won deficit in 2024 and 7.5 trillion won lower than the projected 111.6 trillion won for the 2025 budget.

The ministry also reported that total national assets increased to 3,584 trillion won in 2025, a rise of 365.6 trillion won, or 11.4 percent, from the previous year. This growth was attributed partly to the strong returns from the state pension fund, with the National Pension Service achieving a record-high return of 18.8 percent, boosting financial assets by 244.4 trillion won.

Finance Minister Koo Yun-cheol stated that fiscal operations in 2025 returned to normal, moving away from previous years' large-scale tax revenue shortfalls and worsening fiscal balances. The settlement report, having been approved by the Cabinet, is set to be submitted to the National Assembly following a review by the state audit agency.