[Asia Economy Reporter Jang Sehee] President Moon Jae-in will hold a National Fiscal Strategy Meeting at the Blue House on the 25th to discuss the country's mid- to long-term fiscal strategy. Attention is focused on whether the target for the national debt ratio, which has increased due to the COVID-19 pandemic, will be adjusted.
At the National Fiscal Strategy Meeting, President Moon is expected to discuss fiscal management in response to the COVID-19 situation and the national debt ratio. The National Fiscal Strategy Meeting is the highest-level fiscal meeting attended by the president, the prime minister, and all members of the State Council.
In particular, as the national debt ratio is expected to rise to 50%, an upward adjustment of the national debt ratio is inevitable. A government official said, "According to the National Fiscal Act, a 40-year long-term fiscal management plan must also be created," adding, "Considering the speed at which the national debt is increasing, it is not impossible for the ratio to exceed 50% this year or next year."
On the 17th, Bloomberg Intelligence (BI), a research institute under the government, forecasted in a report that South Korea's GDP will decrease by 1.4% this year and that the national debt ratio relative to GDP could rise to 50% next year.
This is mainly because if the economic shock from COVID-19 prolongs, additional stimulus measures may be introduced, increasing the fiscal deficit further. Even if the economy grows by 2.1% next year, the government is expected to pursue expansionary policies, raising the national debt ratio to 50%.
Previously, the government projected in the 2019?2023 National Fiscal Management Plan that the national debt ratio relative to GDP would be 39.8% this year, 42.1% in 2021, and 44.2% in 2022.
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