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(LEAD) S. Korea to sell 176.4 tln won in state bonds next year

Finance 17:18 December 11, 2020

(ATTN: ADDS more details from 7th para)

SEOUL, Dec. 11 (Yonhap) -- South Korea plans to sell state bonds worth 176.4 trillion won (US$161.8 billion) next year, the finance ministry said Friday, as the country will increase fiscal spending to cope with the fallout of the new coronavirus outbreak.

The planned debt sale marks a rise of 1.1 percent, or 1.9 trillion won, from this year, when Treasurys worth 174.5 trillion won were sold, according to the Ministry of Economy and Finance.

The government plans to sell a net 113.2 trillion won in state bonds next year, down 2 trillion won on-year, the ministry said. It plans to refinance Treasurys worth 63.2 trillion won in 2021, up 3.9 trillion won from this year.

(LEAD) S. Korea to sell 176.4 tln won in state bonds next year - 1

The government plans to increase fiscal spending next year in a bid to cushion the fallout of the COVID-19 pandemic and prop up the slowing economy.

Earlier this month, the National Assembly passed a record 558 trillion-won national budget for next year that includes nearly 4 trillion won allocated for additional coronavirus relief funds and vaccine purchases.

The government plans to issue deficit-covering bonds worth 93.5 trillion won next year to help finance the planned massive fiscal spending.

Without elaborating, the ministry said it plans to sell a larger amount of government bonds in the first half of 2021 than in the second half in a bid to support its fiscal spending plan.

The ministry plans to front-load 72.4 percent of fiscal spending in the January-June period of next year.

Some 30 percent of the total debt sale will be issued with a maturity of two or three years, while the sale of Treasurys with a maturity of five or ten years will make up around 40 percent. The remainder will be government bonds with a maturity of 20 years and longer.

Starting next year, the country will issue Treasurys with a maturity of two years. The sale of such debt will be estimated at around 8-9 percent of the total bond issuance, the ministry added.

The country's expansionary fiscal policy is expected to boost its debt level next year.

The country's government debt is expected to reach 956 trillion won next year, up 150.8 trillion won from this year. The country's debt-to-gross domestic product (GDP) ratio, a gauge of a nation's financial health, will reach 47.3 percent in 2021, higher than just below 40 percent before the pandemic.

sooyeon@yna.co.kr
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