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Korea will strengthen debt management efforts, fiscal chief tells FitchBy Park Han-na
Published : July 6, 2021 - 16:20
South Korea will take preemptive actions to manage its sovereign debt to maintain sound fiscal health, the country’s top economic policy maker said during an annual consultation meeting with global rating agency Fitch Ratings on Tuesday.
Finance Minister Hong Nam-ki said the ratio of national debt to gross domestic product is expected to fare better than projected earlier. The government drew up this year’s second supplementary budget without a debt sale and had paid some debts off, he added.
The 33 trillion won ($29.14 billion) in extra budget was submitted to the National Assembly for approval on Friday to provide another round of COVID-19 relief aid packages for people in the bottom 80 percent income bracket and smaller merchants hit by the pandemic.
“Although the national debt is still at a better level than that of other advanced countries despite an aggressive response to the COVID-19 pandemic, we stressed that preemptive aggregate management will be strengthened to maintain fiscal soundness,” the Finance Ministry said during a virtual meeting with James McCormack, the managing director at Fitch.
According to the ministry last week, the debt-to-GDP ratio will likely hit 47.2 percent, down from the 48.2 percent estimate made in March. The national debt is forecast to reach 963.9 trillion won, down from 965.9 trillion won.
When asked about the government’s response to the spike in COVID-19 cases, Hong said the relaxation of social distancing measures, which was scheduled for July 1, was postponed for a week, but chances of additional measures or business restrictions are slim.
Fitch has maintained its credit rating on Asia’s fourth-largest economy at AA-, the fourth-highest level on the company’s table, since 2012, with a stable rating outlook.
The agency is expected to announce the country’s new rating in one or two months following meetings with the Finance Ministry, the Bank of Korea, the Ministry of Unification and other institutions.
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