IMF Projects Korean Government Debt Ratio Rising to 63.1% by 2031 While Praising Fiscal Expansion
Deputy Prime Minister and Minister of Finance and Economy Koo Yun-cheol presides over and delivers opening remarks at the ‘Emergency Economic Headquarters Meeting' held at the Government Complex Seoul in Jongno-gu, Seoul, on May 15. [Provided by the Ministry of Finance and Economy]
Deputy Prime Minister and Minister of Finance and Economy Koo Yun-cheol directly refuted the controversy surrounding the International Monetary Fund (IMF)'s evaluation of the South Korean government debt, stating, “Groundless claims must end now.” This is interpreted as a direct move to extinguish growing domestic concerns over fiscal soundness after the IMF recently designated South Korea, along with Belgium, as “a country where the government debt ratio will significantly increase.”
Deputy Prime Minister Koo posted an article titled “Groundless claims regarding government debt and the fiscal policy stance must end now” on his social network service X (formerly Twitter) on May 15.
He stated, “The IMF has consistently evaluated from the beginning that the Republic of Korea’s government debt is sustainable,” and added, “It has expressed the same position in the Annual Consultation report (November 2025), the Fiscal Monitor (April 2026), and during the meeting between the IMF Managing Director and me (on April 17, 2026).”
He then pointed out, “Nevertheless, some in the country have been claiming as if the IMF raised issues with our government debt.”
Deputy Prime Minister Koo particularly cited remarks made by the IMF spokesperson during a regular briefing on the previous day. He emphasized, “The IMF spokesperson once again confirmed that ‘the Republic of Korea’s debt situation is quite solid, and the current fiscal expansion is appropriate as it is to support structural reforms aimed at enhancing productivity.’”
He also stated, “The government will raise the potential growth rate through wise investment finances and structural reforms, and will undoubtedly achieve a ‘virtuous cycle of finance and economy’ by creating ‘strong fiscal finances’ through a powerful restructuring of fiscal expenditures.”
Previously, the IMF designated South Korea and Belgium as countries with a large increase in the government debt ratio among advanced economies in its ‘Fiscal Monitor’ report published last month. While forecasting that South Korea’s general government debt (D2) ratio to gross domestic product (GDP) would rise to 63.1% in 2031, the IMF lowered it from its forecast in October of last year (64.3%).
The IMF explained at the time that the debt ratio forecast was partially revised downward as the GDP scale grew due to an upward revision of South Korea’s nominal growth rate forecast. However, it evaluated that the pace of debt increase could be fast in the mid-to-long term, considering the aging population and the expansion of fiscal demand.
Jung Suk-yee
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