"Net Debt One-Eighth of Advanced Economies" – Koo Yoon-chul Backs President Lee's Active Fiscal Policy

Supporting President Lee via Social Media
"First Quarter GDP Growth Rate Highest in Five and a Half Years"
"National Debt Depends on Growth, Not Just Expenditures"

Deputy Prime Minister and Minister of Strategy and Finance Koo Yun-chul, currently on a business trip to Uzbekistan, has directly refuted arguments for fiscal austerity based on national debt and has actively voiced his support for President Lee Jaemyung's expansionary fiscal policy stance.

Deputy Prime Minister and Minister of Strategy and Finance Koo Yun-chul, visiting Samarkand, Uzbekistan to attend the ASEAN+3 Finance Ministers Meeting and the Asian Development Bank (ADB) Annual Meeting, is delivering opening remarks while presiding over the Korea-China-Japan Finance Ministers Meeting held at the Hilton Hotel on the 3rd (local time). Ministry of Strategy and Finance

On May 5, Deputy Prime Minister Koo wrote on social media platform X (formerly Twitter) and Facebook, “The Lee Jaemyung administration’s active fiscal policy is delivering clear results,” adding, “In the first quarter of this year, the GDP growth rate (1.7%) was the highest in five and a half years, and the stock market is setting record highs.” Koo, who is visiting Uzbekistan to attend the Asian Development Bank (ADB) Annual Meeting, emphasized the achievements of expansionary fiscal policy in order to lend his support to President Lee as the nation’s top economic official.

Earlier, President Lee wrote on X, “To those strange people who keep singing the tune of austerity at every opportunity,” and shared a statistical analysis article showing that Korea’s debt ratio forecasts are much lower than those of major economies. The article, based on research by the Korea Institute of Public Finance analyzing the International Monetary Fund (IMF) Fiscal Monitor, stated that Korea’s net debt ratio projection (10.3%) was significantly lower than the average forecast for the 20 major economies (89.6%).

Concerns have recently been raised about the worsening of fiscal soundness due to the government's expansionary fiscal stance, prompting President Lee to issue a rebuttal. The IMF recently warned that Korea’s government debt-to-GDP ratio would rise rapidly to 63% by 2031. Just five months earlier, the projection was for a gradual increase to 59% by 2030, but with the level of warning heightened, arguments for austerity have gained momentum.

Regarding this, Deputy Prime Minister Koo stated, “In 2025, our government debt-to-GDP ratio (52.3%) will be less than half the average of the 38 advanced economies (108.0%),” adding, “Our net debt ratio will be just 9.3%, which is one-eighth of the advanced economies’ average (79.7%).” He systematically refuted each point. He further explained, “The government debt ratio is determined not just by expenditures, but by growth and tax revenues. If fiscal spending leads to growth, the debt ratio can actually stabilize. Fiscal virtuous cycles driven by growth are key.”

Deputy Prime Minister Koo concluded on social media, “Unilateral claims that are not based on facts deceive the public,” and strongly asserted that “a balanced approach and perspective are the right path for the nation and its people.”

With both President Lee and Deputy Prime Minister Koo once again highlighting the importance of expansionary fiscal policy, the government is expected to continue its support in the second half of the year to address issues such as energy price instability due to the prolonged Middle East conflict, managing the recovery of domestic demand, and easing the burden on vulnerable groups. The possibility of a second supplementary budget has also increased. However, debates over the national debt are likely to persist. The ruling bloc claims that the level of debt and the net debt ratio provide sufficient room for further fiscal injection, while the opposition argues that increased issuance of government bonds and expanded spending could ultimately heighten the national debt burden in the long term.

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