Hong Nam-ki in Meeting with Moody's: "Fiscal Normalization Needed... Economic Growth of Over 3% Possible This Year"

Annual Consultation with International Credit Rating Agency Moody's... Moody's Announces South Korea's National Credit Rating for Q2

[Asia Economy Sejong=Reporter Kwon Haeyoung] Deputy Prime Minister and Minister of Economy and Finance Hong Namgi emphasized the necessity of 'fiscal normalization' on the 25th while discussing key issues related to South Korea's sovereign credit rating evaluation with the international credit rating agency Moody's.

First, Deputy Prime Minister Hong stated during a video meeting with Moody's on the same day, "While it was inevitable for fiscal policy to play an active role during the COVID-19 crisis, as our daily life and economic activities normalize going forward, 'fiscal normalization' must also be achieved," adding, "To this end, the government will strive to gradually reduce the total expenditure growth rate, strengthen the revenue base through the adjustment of tax exemptions and reductions, and set and comply with strict fiscal rules."

Regarding national debt, Deputy Prime Minister Hong evaluated that the general government debt-to-GDP ratio, as compiled by the International Monetary Fund (IMF), increased from 42.1% in 2019 to 51.3% in 2021, a 9.2% rise, which is about half the increase rate of advanced countries (17.8%). He self-assessed that this year's national debt ratio and fiscal balance are relatively favorable at 50.1% and -3.3%, respectively, compared to major countries. However, he also mentioned that the government maintains special vigilance regarding the relatively rapid increase in national debt.

Moody's agreed with the assessment that South Korea's fiscal soundness is relatively favorable compared to major countries, while closely monitoring policy directions to maintain fiscal sustainability, fiscal impacts of aging, and the economic effects of the Ukraine crisis.

The government’s projection of achieving an economic growth rate in the 3% range this year was also emphasized. Deputy Prime Minister Hong stressed that despite some uncertainties such as the progression of COVID-19 and geopolitical risks, private consumption and exports are supporting economic recovery, and the government will also make every effort to respond to inflation and the Ukraine crisis.

An official from the Ministry of Economy and Finance stated, "The government will continue to make every effort to enhance external credibility by actively sharing economic trends and major issue response directions through close consultations with international credit rating agencies such as Moody's."

This meeting is part of the annual consultation that Moody's began on the 21st ahead of the rating evaluation. The consultation is scheduled to continue until the 28th, and Moody's plans to announce South Korea's sovereign credit rating evaluation for this year during the second quarter.

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