S.Korea tightens spending, keeps debt to mid-50% by 2027

On June 10, 2022, people sit under the Cheongdam Bridge near the waters of the Han River in Seoul. ANTHONY WALLACE AFP SEOUL South Korea said it would tighten government spending to slow an increase in debt and keep the debt-to- GDP ratio at mid-50 percent by 2027, after years of massive stimulus measures that have weakened the country's fiscal situation.

The finance ministry said that the government will reduce the ratio of fiscal deficit to GDP to a pre-pandemic level of 3 percent or less than the 5 percent estimate for this year, as it released the new administration's fiscal policy plan on Thursday.

The plan says the government will normalise COVID 19 related expenditures, sell unnecessary assets held by public enterprises, manage its employment quota and salary plans more strictly, among other measures.

South Korea's debt-to- GDP ratio increased to 50 percent this year from 36 percent in 2017 as the country launched various measures, such as cash handouts, to boost the economy's recovery from the Pandemic.

The ministry said it would prepare a new fiscal rule based on the plan by early September and put it into effect as soon as the legislation process is complete.