South Korea steps up efforts to curb national debt growth (Minister of Finance)

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This photo, provided by the Economy and Finance Ministry on Tuesday, shows South Korea’s Finance Minister Hong Nam-ki (right) holding an online meeting with officials from the global rating agency Fitch Ratings. (Ministry of Economy and Finance)

South Korea’s top economic policy official said on Tuesday that the country would step up efforts to curb the growth of its national debt in a bid to improve fiscal strength.

Finance Minister Hong Nam-ki made the remarks during his online meeting Monday with James McCormack, managing director of global rating agency Fitch Ratings.

South Korea on Wednesday kicked off its annual consultation meetings with Fitch on the country’s economic situation and growth prospects. Meetings will run until Thursday.

Hong said South Korea’s fiscal health remained relatively healthy despite the COVID-19 pandemic, but the country would “preemptively” make efforts to curb the growth of its sovereign debt, according to the finance ministry.

The government said last week that it would spend 2,000 billion won ($ 1.8 billion) to pay off part of its national debt with excess tax revenue. Without debt sales, the ministry offered an additional budget of 33 trillion won to finance another round of emergency relief funds.

With debt repayment, the national debt is expected to reach 963.9 trillion won this year, down from the estimate of 965.9 trillion won in March.

Hong also said there was a slim possibility for the country to impose further restrictions on business operations despite the delay in implementing a new, relaxed social distancing program.

The country suspended the application of four-tier distancing rules in the greater Seoul area for a week on Wednesday due to the upsurge in cases of the virus and the rapid spread of the more contagious variant of the COVID-19 delta.

Fitch is expected to announce his decision on South Korea’s sovereign ratings within a month or two of the close of the annual meeting with the country.

Fitch maintained its credit rating on Asia’s fourth-largest economy at “AA-,” the fourth-highest on the company’s table, since 2012, with a stable rating outlook. (Yonhap)

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