The country's national debt is forecast to reach 1,734.1 trillion won ($1.28 trillion) by 2030, up from 1,412.8 trillion won this year, according to the Ministry of Planning and Budget's 2026 to 2030 fiscal plan.
Of that amount, 1,312.3 trillion won, or 75.7 percent, is expected to be classified as deficit-financing debt, up from 1,025.2 trillion won and 72.6 percent this year.
Deficit-financing debt refers broadly to borrowing without corresponding financial assets that can be used for repayment. Unlike debt incurred to finance loans or other assets, it must ultimately be serviced largely through future government revenue, including taxes.
That makes its continued increase particularly important for the government's long-term fiscal position.
The rising debt stock is also pushing up the cost of servicing it.
Annual interest payments on national debt are projected to climb from 36.5 trillion won this year to 53.3 trillion won in 2030, crossing the 50 trillion won mark for the first time. Interest costs as a share of gross domestic product are expected to rise from 1.3 percent to 1.5 percent over the same period.
Yet the government's headline debt indicator is expected to improve.
National debt as a share of GDP is projected to fall from 50.6 percent this year to 48.3 percent in 2027 before edging up to 49 percent in 2030. The government attributes the improvement largely to stronger nominal economic growth and increased revenue, including higher tax receipts associated with the semiconductor boom.
The ratio, however, does not capture all of the potential fiscal risks facing the government.
Government-guaranteed debt, which is not counted as direct national debt unless the government is required to repay it, is expected to rise from 27.7 trillion won this year to 157.3 trillion won in 2030. Its ratio to GDP would increase from 1 percent to 4.4 percent.
Such guarantees become a government liability if the public institutions or funds that borrowed the money are unable to repay their obligations.
Much of the expected increase comes from government-backed financing for strategic industries and investment programs.
The guaranteed balance of bonds issued by the Advanced Strategic Industry Fund is projected to rise from 6.4 trillion won this year to 78.5 trillion won in 2030 as the government expands investment in areas including artificial intelligence and AI data centers. New Korea-US strategic investment bonds are also expected to contribute to the increase.
Debt held by major public institutions is also expected to increase sharply.
The combined liabilities of 37 major public institutions are projected to rise from 778.3 trillion won this year to 997.4 trillion won in 2030, an increase of 219.1 trillion won in four years.
A major contributor is Korea Land and Housing Corp., or LH, as the state housing developer takes on a larger role in expanding housing supply. Its debt alone is projected to rise from 197.5 trillion won this year to 372.8 trillion won by 2030.
The risk would become more pronounced if economic growth or tax revenue weakens, particularly if the semiconductor cycle cools or indebted public institutions face difficulty meeting their obligations.
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