The International Monetary Fund (IMF) announced on October 14 that it has revised South Korea's general government debt ratio for this year to 46.1%.
According to the Ministry of Economy and Finance, this forecast is 8.3 percentage points lower than the estimate made in April. This figure represents 37% of the average for the Group of Seven (G7) countries (123.6%) and 43% of the average for advanced economies (107.6%). The IMF also predicts that the increase in South Korea's debt will be lower than the average for advanced economies.
The IMF expects the country's debt ratio to remain in the mid-40s to low-50s by 2031.
This downward adjustment reflects a 'fiscal-growth virtuous cycle,' where proactive fiscal policies support economic growth, which in turn enhances the revenue base and improves fiscal sustainability, according to the ministry.
An IMF official explained, "The revised outlook for general government debt is attributed to strong domestic GDP growth and the potential for improved revenue conditions by 2030."
In addition to the IMF's forecast, major international organizations and credit rating agencies, including the Organisation for Economic Co-operation and Development (OECD), Fitch, and Moody's, have recently provided positive assessments of South Korea's fiscal situation and active fiscal management.
Fitch noted last month that South Korea's fiscal performance has improved significantly beyond expectations, while Moody's observed that the government's 2027 budget proposal aims for sustainable finances while investing surplus revenue in future growth, balancing sustainability and growth. The OECD stated that monetary easing and expansionary fiscal policies are boosting private consumption.
A ministry official stated, "We will support a rebound in potential growth through bold investments and ensure fiscal sustainability, leading to a virtuous cycle of finance and growth that enhances future investments and revenue bases."
* This article has been translated by AI.
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