Citi Adjusts 2026 and 2027 Government Bond Issuance Forecasts to 221 Trillion Won and 211 Trillion Won

Citi Research has revised its total government bond issuance forecasts for 2026 to 221 trillion won and for 2027 to 211 trillion won. There is an analysis suggesting that excess tax revenue will be prioritized for the Future Response Fund over the reduction of government bond issuance. Economist Kim Jin-wook from Citi adjusted the 2026 forecast from the previous 216 trillion won to 221 trillion won, and for 2027 from 198 trillion won to 211 trillion won. The total issuance amount for 2027, which is 211 trillion won, combines net redemption of 110 trillion won and net issuance of 101 trillion won. Citi expects that this year's government bond issuance of 5 trillion won will be concentrated in the reduction of long-term supply from September to early December. Long-term bonds refer to government bonds with maturities of over 20 years, which are related to the demand from insurance companies and pension funds. Citi forecasts that the proportion of long-term bonds will decrease in the maturity distribution for 2027, while the proportion of other maturities will increase. The government announced its plan for the Future Response Fund on the 21st, which will include excess tax revenue and global surplus as funding sources. Citi estimates this year's global surplus to be between 20 trillion and 30 trillion won, and the excess tax revenue for 2027 to be between 60 trillion and 70 trillion won, indicating that expenditures of 40 trillion won through the Future Response Fund may be reflected in the 2027 budget. The total expenditure scale of the 2027 budget is expected to reach 820 trillion won. Citi anticipates that the government will prioritize the Future Response Fund over the reduction of government bond issuance.

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