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South Korea Borrows $113.65 Billion in 2025, 2nd Highest Central Bank Loan

The South Korean government borrowed 164.5 trillion won from the Bank of Korea in 2025, marking the second-highest annual use of its central bank overdraft facility on record. This substantial borrowing, slightly below the 2024 record, occurred amid political turmoil following a martial law declaration. The government paid nearly 158.1 billion won in interest on these loans, also the second-highest annual payment. Concurrently, the finance ministry is moving to swiftly execute delayed defense expenditures from the 2025 budget, which were not disbursed by year's end.

Key Points: S. Korea's $113.65B Central Bank Borrowing 2nd Highest in 2025

  • Second-largest BOK borrowing at $113.65B
  • High interest payments of 158B won
  • Borrowing linked to 2024 political turmoil
  • Defense budget execution delays controversy
  • Government using "January revenue" for spending
2 min read

S. Korea borrows 2nd largest $113.65 billion in temporary loans from BOK in 2025

South Korea borrowed 164.5 trillion won from the BOK in 2025, paying high interest amid political turmoil and delayed defense spending.

"Among the 2025 expenditure budget items, spending that could not be executed will be carried out as quickly as possible within this week - Ministry of Economy and Finance"

Seoul, Jan 7

The government borrowed the second-largest amount of temporary funds on record from the central bank last year through its overdraft facility, data showed on Wednesday.

According to the data from the Bank of Korea (BOK) submitted to Rep. Park Sung-hoon of the main opposition People Power Party, the government's temporary borrowings from the BOK totalled 164.5 trillion won (US$113.65 billion) in 2025, including 5 trillion won drawn in December.

The figure was slightly lower than the record 173 trillion won posted in 2024, reports Yonhap news agency.

In detail, the government borrowed 88.6 trillion won in the first half of 2025, as the country was reeling from political turmoil following the martial law declaration in December 2024, and another 75.9 trillion won in the second half.

The government, accordingly, paid 158.09 billion won in interest to the BOK last year, the second-highest annual interest payment on record, following 209.28 billion won in 2024, the data showed.

The overdraft facility allows the government to temporarily borrow funds from the central bank to cover short-term mismatches between revenue and spending.

Meanwhile, the Ministry of Economy and Finance said Tuesday that portions of last year's defence budget that were not disbursed by the end of 2025 will be executed as swiftly as possible.

The announcement came amid controversy over the failure to pay about 1.3 trillion won (US$899 million) in defence-related expenditures to military units and defence contractors by the end of last year.

"Among the 2025 expenditure budget items, spending that could not be executed will be carried out as quickly as possible within this week," the ministry said in a press release.

The ministry added that it is holding consultations with the defence ministry and other relevant ministries based on what is known as "January revenue."

The term refers to tax and other revenue for the 2025 fiscal year that is legally deposited into the state treasury by the second business day of 2026, which fell on Monday.

- IANS

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Reader Comments

S
Sarah B
The mention of "political turmoil" and "martial law" is concerning. Borrowing this much from the central bank can lead to inflationary pressures. Hope the Indian RBI and government are watching this case study closely. Stability is key for growth.
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Priya S
Over $113 billion! And they couldn't even pay their defence contractors on time? That's poor financial management. The interest payment alone is massive. In India, we need transparency in how such emergency funds are used, if ever needed. Jai Hind!
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Rohit P
Interesting to see a major economy in this situation. The link between political instability (martial law!) and economic stress is clear. Thankfully, India has strong institutions. But this is a reminder that we must always prioritize political and economic stability. 🇮🇳
K
Kavya N
With all respect to South Korea, this news is a bit alarming. It's the second largest borrowing ever. It makes me appreciate the relative fiscal caution shown by our finance ministry, even if sometimes we wish for faster development. Slow and steady wins the race.
M
Michael C
The defence budget part is worrying. If a nation can't pay its military on time, it signals deeper cash flow problems. India's defence modernization is crucial for our security. Hope our budget execution is more efficient.

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