IMF Hails Korea's Fiscal Austerity

  • By Hwang Ji-yoon

    October 30, 2023 13:30

    Thomas Helbling /EPA-Yonhap
    The International Monetary Fund has praised Korea's fiscal austerity policy as a model for other countries around the world.
    "Korea, which has reduced deficits after the pandemic and is now committed to keep deficits low going forward, is for us an example for this fiscal prudence and the appropriate fiscal policy conduct in these circumstances," said Thomas Helbling, the deputy director of the IMF's Asia and Pacific Department, in a press briefing earlier this month.
    "In terms of desirable debt levels for fiscal… we think that current debt levels in Korea are broadly appropriate and should be maintained," he added.
    Korea's national debt increased a whopping W123.5 trillion to W970.7 trillion in 2021 (US$1=W1,356). Even last year it rose,by W96.7 trillion to reach W1,067.4 trillion, but it is expected to grow by only W6.7 trillion this year and W6.2 trillion next year.
    By IMF standards Korea's government debt-to-GDP ratio for this year is 54.3 percent, which is much lower than the average of the G20 countries of 122.7 percent.
    However, the IMF expressed concerns about Korea's high household debt, which is 1.6 times disposable income.
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