Ulsan Raises Municipal Treasury Deposit Rates to Enhance Fiscal Efficiency

Kyongnam Bank and NongHyup Bank Raise Deposit Interest Rates

Increased Interest Income and Enhanced Transparency in Treasury Operations

As concerns grow among local governments over how to improve the efficiency of fiscal management, Ulsan Metropolitan City has decided to adjust the interest rates on its municipal treasury deposits to better reflect market conditions and increase returns on its budget operations.

On July 21, Ulsan Metropolitan City announced that it had signed an “Amendment Agreement for Municipal Treasury Operations” at the main conference room of City Hall, with BNK Kyongnam Bank and NongHyup Bank, the designated municipal treasury banks. The main content of the agreement is to raise deposit interest rates.

This agreement was initiated after amendments to related laws last year led to the public disclosure of municipal treasury deposit rates across the country. As a result, Ulsan Metropolitan City reviewed its own rates and began negotiations with its treasury banks to align its relatively lower rates with prevailing standards.

As a result of these discussions, BNK Kyongnam Bank, the primary municipal treasury bank, agreed to raise its average fixed deposit rate by 0.38 percentage points, while NongHyup Bank, the secondary treasury bank, will increase its rate by 0.13 percentage points. Ulsan Metropolitan City stated that, as leading regional financial institutions, both banks are committed to enhancing fiscal efficiency for the city and promoting mutually beneficial development within the region.

Ulsan Metropolitan City expects this interest rate adjustment to increase interest income from municipal treasury funds, thereby contributing not only to fiscal soundness but also to the advancement of major policy projects. At a time when it is challenging to expand tax revenue and central government grants, the city regards this as a meaningful measure for using existing funds more efficiently.

The city will also improve relevant regulations. By incorporating the amended standards from the Ministry of the Interior and Safety’s “Criteria for Designating Local Government Treasury Banks,” Ulsan plans to revise its own “Ordinance on the Designation and Management of Municipal Treasury Banks.” This aims to stimulate fair interest rate competition among financial institutions and further strengthen both the fairness and transparency of the selection process for municipal treasury banks.

Recently, local governments have moved beyond the simple administration of treasury accounts to instead comprehensively evaluate deposit interest rates, financial services, and regional contribution in an effort to improve financial efficiency. Ulsan Metropolitan City, leveraging this new agreement, will focus on boosting profitability in budget operations and expanding fiscal returns to its citizens.

An official from Ulsan Metropolitan City stated, “We will continue to lay the institutional groundwork so that financial institutions can present competitive interest rates and diverse conditions during the selection process for municipal treasury banks. We are committed to enhancing the efficiency of fiscal management so that more benefits can be returned to the citizens.”

BNK Kyongnam Bank and NongHyup Bank have been responsible for handling Ulsan Metropolitan City’s municipal treasury operations, including the management of revenue and expenditures, for four years from 2024 to 2027.

Ulsan City Hall.

This content was produced with the assistance of AI translation services.