Seoul, (Asian independent) South Korea’s national debt ratio is expected to gain at the fastest clip among 35 advanced nations over the next five years despite its high financial soundness, an International Monetary Fund (IMF) report said on Monday.
Seoul’s ratio of national debt to its gross domestic product (GDP) is likely to reach 66.7 per cent in 2026, up 15.4 percentage points from the end of this year, according to the IMF report.
The expected growth pace is the highest among 35 nations that the Washington-based international organisation defines as advanced economies, reports Yonhap News Agency.
Over the cited period, the average ratio of the 35 countries is forecast to decrease to 118.6 per cent from 121.6 per cent.
In particular, the G7 nations — the US, the UK, France, Germany, Japan, Canada and Italy — are projected to drop by 3.2 percentage points to 135.8 per cent.
South Korea’s growth rate is much higher than the 8.7 percentage points of the Czech Republic, followed by Belgium with 6.3 percentage points and Singapore with 6 percentage points.
The report came as South Korea increased fiscal spending to tackle the fallout from the coronavirus outbreak.
This year alone, Seoul drafted a combined extra budget of 49.9 trillion won.
In addition, experts point out that South Korea’s state debt is widely projected to increase down the road due to its low birth-rate and population aging.
Yet the report showed South Korea’s current financial health remains high, with its debt-GDP ratio coming to 51.3 per cent this year, the 25th lowest among the 35 comparable countries.
