South Korea Economics: Future Response Fund to Provide Larger Room for 2027 KTB Issuance Reduction

研报英文原文证据摘录

South Korea Economics: Future Response Fund to Provide Larger Room for 2027 KTB Issuance Reduction

Flash |

09 Jul 2026 11:55:47 ET │ 12 pages

South Korea Economics

Future Response Fund to Provide Larger Room for 2027 KTB Issuance

Reduction

CITI’S TAKE

The government plans to establish a Future Response Fund, which may

collect around KRW100trn extra corporate tax revenue for 2027. In our

view, the Future Response Fund will likely improve the efficiency of fiscal

spending meaningfully compared to other options such as fiscal surplus Jin-Wook KimAC

and supplementary budget. We believe the Future Response Fund will +82-2-2077-4229

provide larger room to reduce 2027 KTB issuance thanks to more efficient jinwook.kim@citi.com

fiscal resource management. We think 2027 gross KTB issuance could

moderate to around KRW198trn (vs. KRW226trn in 2026), which would

be the sum of KRW111trn redemption and KRW87trn net issuance (note).

Meanwhile, a potential second fiscal stimulus (around KRW25trn or

above) could be separately proposed by early September’26 to accelerate

fiscal spending in 4Q26 before the passage of the special law for the

Future Response Fund by early December’26.

The President Office and Budget Minister recently stated, the government will

establish a Future Response Fund (Yonhap News, June 7; Yonhap News, July 9).

[1] Fund revenue and size: The Future Response Fund will likely collect additional tax

revenue generated by historical memory chip upcycle. We expect the Future Response

Fund to collect around KRW100trn extra corporate tax revenue for 2027.

[2] Fund spending: The Future Response Fund will likely target investment and

welfare. First, the investment spending would manage broad innovation investment