North Korea is, in a literal sense, perhaps the most orthodox socialist country operating under a strict socialist state ownership economy system.
But have you ever wondered the existence of North Korean Bond? During our recent visit to North Korea, we discovered some intriguing facts about the North Korean bond.
Table of Contents
HOW TO SAY BOND IN NORTH KOREA?
Before diving into the history and current state of bonds in North Korea, we first need to clarify one question: What is the word for “bond” in socialist North Korea?
Same as South Korea, “bond” is written as 채권 and pronounced as Chae Gwon. Chae means debt, while Gwon refers to a certificate or document as proof.
GOVERNMENT BOND
According to the Economic Dictionary published in 1985 by the Institute of Thematic Economic Research under the North Korean Academy of Social Sciences, government bonds in socialist countries are defined as “a means of mobilising people’s savings to implement national policies, develop the economy, and improve living standards, with a savings-oriented nature.” It describes North Korean bond as a legitimate tool that aligns with the improvement of the socialist economic system.
North Korean Government Bonds in the 1950s
In October 1950, after the outbreak of the Korean War, the North Korean government issued the People’s Economic Development Bond. The official purpose was to raise funds for the construction of cultural institutions and irrigation facilities for state-owned corporations. However, part of the funds was redirected to military expenses to sustain the war effort.
The government initially planned to issue bonds that worth 1.5 billion, available in 50, 100, and 500 Won denominations. To encourage participation, buyers were allowed to pay in instalments over seven months. However, driven by strong patriotic sentiment, public subscriptions exceeded expectations, reaching 2.7 billion North Korean Won.
In December 1950, the government planned a second issuance of the People’s Economic Development Bond, but it was postponed until April 1951.
In June 1951, the North Korean government issued a decree to introduce the Motherland Defence Lottery Bond. Featuring images of the Korean People’s Army, tanks, and warships, this North Korean bond aimed to raise funds for purchasing military equipment, including aircraft, tanks, and naval vessels.
North Korean Government Bond in 2003
After 1951, the next time North Korean bond was issued was in 2003.
As part of the “7.1 Economic Management Improvement Measures,” the government introduced the People’s Livelihood Bond to cover the fiscal deficit and control money circulation. This was a non-interest-bearing savings North Korean bond with a 10-year maturity. It came in three denominations: 500 Won, 1,000 Won, and 5,000 Won.
The government stated that the funds raised would be primarily used for the construction and modernisation of power plants in central Pyongyang, housing and street renovations, land adjustments in Pyongyang, South Pyongan Province, and Nampo, and the development of revolutionary historical sites in the Mount Paektu region.
The repayment method for the People’s Livelihood Bond was highly unusual. Instead of fixed interest payments, the government held one or two lotteries each year for bondholders. Winners were selected from first to seventh prize, with varying levels of payouts. Bondholders who did not win a prize were promised repayment of the face value at maturity.
| First Prize | 50 times the face value |
| Second Prize | 25 times the face value |
| Third prize | 10 times the face value |
| Fourth prize | 5 times the face value |
| Fifth prize | 4 times the face value |
| Sixth prize | 3 times the face value |
| Seventh prize | 2 times the face value |
North Korean Government Bond in 2020
Rumor has it that in 2020, due to economic difficulties caused by the pandemic, North Korean bond was issued by the government again. However, this information is yet to be confirmed.
CORPORATE BOND
When it comes to corporate bonds in North Korea, the situation is somewhat tricky.
According to the Kwangmyong Encyclopedia (2010), corporate stocks and bonds are defined as exploitative tools of capitalist society that generate interest without requiring labour input.
On 13 February 2025, YPT’s management team became the first Westerners to enter North Korea after COVID. During this business trip, they discovered traces of corporate bonds in Rason Special Economic Zone. On the wall of the former Czech Beer Bar in Rason, they found a notice about the issuance of corporate bond by Rason Ryongson Beer Factory.
The notice stated that Rason Ryongson Beer Factory planned to expand its production capacity and extend its business nationwide in 2025. To finance this, it would issue cash bonds from 15 February to 30 March, offering an annual interest rate of 6% for one-year bonds, 7% for two-year bonds, and 8% for three-year bonds. Subscribers would also enjoy preferential product services and participate in a lottery service linked to the bonds.
These bonds offered relatively attractive interest rates, and the additional lottery service provided an opportunity for even higher returns. This suggests that, at least in Rason, a special economic zone, corporate bonds do exist. Whether corporations in other parts of North Korea issue bonds remains to be further verified in future visits.
THE NK DEBT CORPORATION
In the 1970s, over 140 banks from more than 30 countries provided loans to North Korea, but the country failed to repay them. In 1997, France’s BNP Paribas acquired the debt claims from these creditor banks and issued a derivative product called The NK Debt Corporation. The price of these derivatives fluctuated with changes in international relations, and investors hoped to make a significant profit from these distressed debts.
CONCLUSION
Now, let’s return to the initial question: Does North Korea have bonds? The answer is Yes – both government and corporate bonds do exist.
North Korea’s unique economic system is an interest topic. During YPT’s Rason tour, you can visit the Rason Ryongson Beer Factory and learn more about the corporate North Korean bond by yourself. Meanwhile, our other North Korea tour groups also offer opportunities of visiting factories in other regions, providing deeper insights into the country’s corporate structure.
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